J A M E S L A T H A M P L C
ANNUAL REPORT & ACCOUNTS 2022
Contents
Summary and Highlights
1 Financial Highlights and Calendar
2 Chairman’s Statement
Strategic Report
James Latham plc and Our Objectives and Strategy
4 Outline of the Strategic Report
4 Section 172 Statement
6
8 Corporate Responsibility
15 Principal Risks and Uncertainties
18 Key Performance Indicators
19 Operating Review
22 Financial Review
Corporate Governance
26 Corporate Governance Report
29 Directors and Advisors
30 Directors’ Remuneration Report
34 Directors’ Report
37 Statement of Directors’ Responsibilities
38
Independent Auditor’s Report
Financial Statements
44 Consolidated Income Statement
45 Consolidated Statement of Comprehensive Income
46 Consolidated and Company Balance Sheet
47 Consolidated Statement of Changes in Equity
48 Company Statement of Changes in Equity
49 Consolidated and Company Cash Flow Statement
50 Notes forming part of the Group Accounts
81 Notice of the Annual General Meeting
85 The Latham Group
Financial Highlights and Calendar
for the year ended 31 March 2022
Financial Highlights
Revenue
2022 up 54.0%
2021 up 1.3%
£385.4m 2020 up 5.1%
2019 up 9.4%
2018 up 8.1%
250.2
247.1
235.1
214.9
385.4
150
200
250
300
350
400
Earnings per share
(see Note 9)
229.3p
2022 up 204.1%
2021 up 19.5%
2020 no change
2019 down 2.0%
2018 up 15%
75.4
63.1
63.1
64.4
229.3
0
50
100
150
200
250
Total Dividend
per share
33.5p
2022 up 58.0%
2021 up 36.8%
21.2
33.5
2020 down 13.4%
15.5
2019 up 7.8%
2018 up 8.1%
17.9
16.6
10
15
20
25
30
35
Net profit attributable to
shareholders
£45.6m
Up 204.0%
Equity Shareholders Funds
Cash and Cash Equivalents
£164.0m
Up 37.7%
£37.0m
Up 29.4%
Financial Calendar
Record date for final dividend 2022
Annual General Meeting 2022
Payment of final dividend
Interim 2022/23 results announcement
Interim dividend expected payment date
Preliminary announcement of 2022/23 results
Annual General Meeting 2023
5 August 2022
31 August 2022
2 September 2022
1 December 2022
27 January 2023
29 June 2023
23 August 2023
JAMES LATHAM PLC ANNUAL REPORT 2022
1
Chairman’s Statement
The financial year to 31 March 2022 was a year in which there were
considerable challenges to the business. The economy bounced back
from the effects of the COVID-19 pandemic which put pressure on
global supply chains and led to difficulties in obtaining regular supplies
of inventory. In addition there were significant increases in the market
prices for our products, mainly in the first half of the year. I am
therefore very pleased to report unprecedented trading results for the
financial year to 31 March 2022.
Revenue for the financial year to 31 March 2022 was
£385.4m, up 54.0% on last year’s £250.2m. Like for
like volumes, taking into account working days and
acquisitions, increased by 11.9% with the growth equally
on delivered business from our own warehouses and direct
volumes shipped from the ports or from the manufacturers.
The cost price of our products is on average 36.2% higher
than at the start of the financial year.
Gross profit percentage for the financial year to 31 March
2022 was 23.8% compared with 18.0% in the previous
financial year, and 26.4% reported in the half year accounts.
This figure includes warehouse costs and we are continuing
to extend the shift systems to improve our service levels
with six of our depots now working 24 hours a day.
Profit before tax is £58.0m, up £39.4m on last year’s
£18.6m. Profit after tax for the year is £45.6m up from
last year’s £15.0m. Earnings per ordinary share is 229.3p
(2021: 75.4p) an increase of 204.1%.
As at 31 March 2022 net assets have increased to
£164.0m (2021: £119.1m). Inventory levels have increased
to £74.2m from £48.2m last year. This is partly to do with
increased inventory in our new business, IJK Timber,
based in Northern Ireland, but mainly due to increases in
prices for our products and extended lead times for our
imported products. Trade and other receivables at the year
end were £20.3m higher than the previous year due to the
increase in revenues but are still showing an improvement
on last year’s debtor days. Despite the challenges of the
economic environment, bad debts have remained small
at 0.1% of revenues. Cash and cash equivalents of £37.0m
(2021: £28.6m) remain strong with good cash flows from
operating activities.
Final dividend
The Board has declared a final dividend of 27.0p per
Ordinary Share (2021: 15.5p). This final dividend includes
a payment of 8.0p per Ordinary Share to reflect the
exceptional results for the year. The dividend is payable
on 2 September 2022 to ordinary shareholders on the
Company’s register at close of business on 5 August 2022.
The ex-dividend date will be 4 August 2022. The total
dividend per ordinary share of 33.5p for the year (2021:
21.2p) is covered 6.8 times by earnings (2021: 3.6 times).
Current and future trading
The strong results seen in this financial year have
continued into the new financial year, with volumes and
margins comparable to those achieved in the second half
of 2021/22. The supply of many of our key products has
become a little easier but there are still a few notable
challenges, including obtaining alternative supplies to
replace products that previously were sourced from
Russia. We are starting to see signs that cost prices are
weakening in some of our major product groups, but the
continuing supply chain issues and supplier cost pressures
on raw material, logistics, power and other overheads, are
tempering these price weaknesses.
I would like to thank all of our key suppliers for supporting
us during this financial year. I think the true partnerships
that we have developed over many years have stood us apart
from our competitors during what has been a challenging
period for us all.
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JAMES LATHAM PLC ANNUAL REPORT 2022
Chairman’s Statement
During the year we purchased Sarcon (No 155) Ltd
which trades as IJK Timber in Northern Ireland. This
acquisition and subsequent integration into our systems
have gone very well and we now have a great platform to
develop panel product sales on the island of Ireland.
Despite the positive start to the year there is increasing
uncertainty surrounding the macroeconomic outlook
and continuing inflationary pressures on our overheads.
At this stage the majority of our customers remain busy.
We are confident in our ability to deal with the
challenges as they arise, but we do not expect to repeat
the exceptional results achieved in this financial year.
Development strategy
The directors remain focussed on developing the business,
and believe that the results demonstrate the flexibility of
our business model to deal with all the challenges that we
have faced in the last year. We will continue to invest in
our current warehouse facilities, including extending the
Yate warehouse to increase capacity and further extending
the working day at Scotland, Gateshead and Purfleet.
We will also complete phase 2 of the investment in new
machinery at Dresser Mouldings to have a state of the art
production facility to improve efficiencies and enable us to
target more business.
In the summer we will be relocating our Head Office
team to a new modern office in Hemel Hempstead,
which will allow us to look at the opportunity to further
develop the warehouse at Hemel Hempstead.
We will continue to look for acquisitions that either help
with our strategy of developing sales in specific market
sectors or any geographical opportunities that arise.
We recognise that the movement of product from
suppliers or distribution centres to our customers is
critical, and we will be reviewing this to identify any
potential efficiencies that we can make to improve the
service to our customers.
Directors and staff
I would like to extend a warm welcome to the team at
IJK Timber to the James Latham business. It has been a
pleasure to get to know them. Congratulations as well
to Emma Atkins at our Purfleet depot, who was awarded
the career development award at the 2021 TTJ awards
ceremony, this is a fantastic achievement.
I would also like to thank the Supply Chain Team,
headed by Steve Frommont, for the amazing job that the
whole team have done in managing the flow of product
from all over the world into our depots. This year has
been the most challenging I have ever seen when it comes
to making sure that our depots have all the products they
need to look after our customers. Constraints on supply
from suppliers all over the world, challenges at both the
port of entry and exit for all of our imported product and
container shortages came at a time when it felt like every
company in the UK was trying to negotiate more space
at the ports.
In terms of corporate structure , there is a clear division
of responsibilities between the main board, which
determines strategy and exercises corporate governance
and the trading board of Lathams Limited, chaired by
Andrew Wright, which sets and monitors trading and
operations policy. Both boards are well balanced in terms
of experience and skills.
I would like to personally thank all the directors and
everyone in the group for their support, and their
individual contributions that have undoubtedly enabled
the business to achieve this incredible result. I believe this
demonstrates the great team spirit and communication that
we have in our business which sets us apart, and will stand
us in good stead for the future.
Nick Latham,
Chairman, James Latham plc
12 July 2022
JAMES LATHAM PLC ANNUAL REPORT 2022
3
Strategic Report
Introduction
Outline of the Strategic Report
The directors present their Strategic Report for the
year ended 31 March 2022. Included within these
sections are the four Principles for delivering growth
as contained within the Quoted Companies Alliance
Corporate Governance Code 2018, demonstrating how
we comply with these principles.
James Latham plc and Our Objectives and Strategy
Corporate Responsibility
Principal Risks and Uncertainties
Page
6
8
15
18 Key Performance Indicators
19 Operating Review
Financial Review
22
The Strategic Report was approved by the board of
directors on 12 July 2022 and signed on its behalf by:
Nick Latham
David Dunmow
Section 172 Statement
The Strategic Report contains information on how the
directors have had regard to the matters set out in
Section 172 (1) (a) to (f) of the Companies Act 2006
when performing their duties under section 172.
The long term success of our business has always
depended on maintaining mutually beneficial
arrangements with all our key stakeholders, and having
shared goals. The group ensures that these shared goals
are communicated throughout the business, both at
group and local board level, as well as with the
stakeholders themselves. Details of how we interact
with our key stakeholders are discussed further in the
Strategic Report. Our key stakeholders are:-
• Shareholders. As owners of the Group, we rely on
the support and views of our shareholders. Members
of the board have regular dialogue with shareholders
in order to develop an understanding of their views.
Shareholder feedback is regularly reported on and
discussed by the board and their views are considered
as part of the decision making process. The AGM is
an important forum for shareholders to meet the
board and ask any questions they may have. Further
information is shown on pages 8 and 28.
4
JAMES LATHAM PLC ANNUAL REPORT 2022
• Employees. All of our employees throughout the
business are key to our success, and we need to
reward, protect and listen at all levels. We engage
with our employees through the Company Intranet,
local board meetings, performance reviews and
briefings from various parts of the business.
We undertake employee surveys which we use to
present ideas to the board, representing the views of
all our staff. We provide share schemes to encourage
employees to share in the success of the Company.
Further information is shown on page 14.
• Customers and Suppliers. Building long term
relationships with our customers and suppliers is
mutually beneficial for our shared success. Key to this
is availability of stocks, service levels and expertise
of our staff, to be able to provide the best products
and best solutions to our customers, which cannot be
done without the support of our suppliers. Further
information is found on page 6.
• Environment and Local Communities. As a provider
of natural materials, our impact and interaction with
the environment and our local communities is key to
our long term success. We support local charities with
donations and encourage employees to undertake
fundraising activities. Further information is found on
on pages 8 to 14.
Kitchen in Valchromat by Mailen Design.
Strategic Report
Introduction
HIMACS and Quarter Cut Oak Veneer.
Decisions are made with a long term view in mind and
having regard to all our stakeholders. These decisions are
made in line with group policies, but local management
are empowered to make decisions up to set levels of
cost to ensure that stakeholders for their business units
are properly considered. Where possible, decisions are
explained and discussed with affected stakeholders before
any actions are implemented.
The key decisions taken by the board in the year to
31 March 2022 include:
a. Supply chain difficulties involved allocating more
resources to inventories in order to ensure that there
was no disruption in our supplies to our customers.
b. The acquisition of Sarcon (No 155) Limited, where
we considered whether this company, based in
Northern Ireland, was value for money and fitted our
geographical strategy, and concluded in favour of
making the acquisition.
c. Due to the COVID-19 pandemic, the AGM could
not be held in person again. Instead we decided to
allow any questions to be asked in advance of the
meeting, with the board’s responses published on the
Company’s Investors website. The 2022 AGM will return
to being held in person.
d. Approval of capital expenditure at our Dresser
Mouldings branch, where the purchase of new
machinery was considered a long term investment
necessary for the future profits from this site.
e. Approval of annual budget and three year plans.
This year’s budget and rolling three year plan were
approved following a review of the budgets produced
by the individual profit centres to ensure that this
met our strategic priorities and considered the risks.
We considered whether these plans adequately met
the demands of our customers both in terms of service
and in environmental concerns. We also considered the
health and safety implications of these plans, as well as
take on board ideas put forward by employees.
f. Approval of the final dividend. We considered all the
stakeholders in setting the dividend levels, including
meeting shareholder expectations, maintaining a
sufficient cash reserve for future investment and
ensuring that there are sufficient reserves to meet our
obligations to our pensioners.
JAMES LATHAM PLC ANNUAL REPORT 2022
5
Strategic Report
James Latham plc and Our Objectives and Strategy
DELIVER GROWTH
Principle 1 – Establish a strategy and business model which promote long term value
for shareholders.
Objectives
James Latham plc sets out to be the supplier of choice
throughout the UK and Ireland for joinery, door and
kitchen manufacturers, commercial interior fitout and
many other market sectors, offering a wide range of wood
based panel products, natural acrylic stone, door blanks,
hardwoods, high grade softwoods, modified and engineered
timbers, decking and mouldings and other machined
products. We also supply commodity and specialist panel
products to timber and builders’ merchants.
Environmental interests in, and concerns about, the
growth and harvest of timber are key drivers of company
policy, with the company aiming to increase each year
the amount of legal and sustainable product supplied
into its marketplace. The UK is committed to becoming
net-zero carbon by 2050 and the company is aiming to
provide embodied carbon information to our customers
to demonstrate the carbon story of our products.
The company believes that to provide the service
demanded, we need to be close to our customers.
We offer national coverage from thirteen locations in
the UK and three locations in the Republic of Ireland, as
shown in The Latham Group map on page 85, as well as
from various port and storage locations around the UK.
Two new locations in Northern Ireland have been added
this year to improve our distribution network.
Our timber processing facility at Dresser Mouldings
supplies both the depots and customers directly.
Having stock of product in the right place at the right
time is important to provide this service. Commodity
imports are held in ports including Tilbury, Liverpool
and Grangemouth. This stock can be delivered directly
to customers for multi-pack orders, or transferred to
the depots for onward delivery. Around London we
stock Panel Products and Timber Products in separate
warehouses whereas a full range of products are held
in our other locations around the United Kingdom.
We also hold a range of specialist products in Leeds for
national distribution and Leeds also offers an efficient
delivery service to Ireland to complement the business
supplied directly from our timber depots in the
Republic of Ireland.
The company is well respected in its industry and amongst
its customers and suppliers for its principled trading
policies and its integrity.
The company’s objectives are:
• To maximise shareholder value over the
medium term;
• To be the supplier of choice for our customers by
understanding and meeting their needs and providing
them with the right material at the right time;
• To maintain its presence in timber based products but
to expand the product range to the existing customer
base from an extended distribution network;
• To increase sales of third party certified legal and
sustainable timber products and drive Corporate Social
Responsibilities within our company and industry;
• To provide a safe working environment for our staff;
• To improve service levels by improving warehouse
facilities to speed order picking over an extended
product range; and
• To employ and develop well-trained, knowledgeable
and helpful staff.
Strategy for developing the business
The directors recognise that the strength of the group
is as a distributor of high quality timber and associated
products, purchased using the Timber Trade Federation
Responsible Purchasing Policy from legal and sustainable
sources of supply, to meet existing and new customer
demands on product and service.
Working with existing and potentially new suppliers, we
identify products to add to our extensive range. This
can include non timber products where they fit into the
requirements of our customer base. Our aim is to provide
a true one stop shop to our key target markets.
Our strategy for developing the business is two fold.
Firstly to ensure that we maintain and improve our
volumes of commodity products, including MDF,
OSB, Plywood, North American Hardwoods, European
6
JAMES LATHAM PLC ANNUAL REPORT 2022
Strategic Report
James Latham plc and Our Objectives and Strategy
Hardwoods and African Hardwoods. Secondly, alongside
the commodity products we sell an increasing amount of
speciality products, including Door Blanks, Melamines,
Laminates and other decorative panels, Accoya, Woodex®
and Decking. The Dresser Moulding facility allows us to
further develop our offering of processed timbers. Full
ranges of the specialist products are stocked and key to
our success is having the right stock in the right place at
the right time.
Melamine, decorative laminates and edging products
are important product groups and all Latham depots
offer a comprehensive range of products ex-stock,
including decors from Egger, Kronospan and CLEAF.
Sales of technical engineered and modified timber are a
key part of our strategic sales development for timber. An
enhanced range of products are stocked, including Accoya,
WoodEx®, Decking and machined and coated timbers.
Our Leeds depot acts as the central distribution point
for ATP, HI-Macs®, Avonite, Kydex®, Laminates and
Valchromat. These are all available on a national basis for
prompt delivery to our customer base. We have and will
continue to enhance our delivery service and will continue
to develop our centrally held stocks.
All depots have a three year rolling business plan to ensure
that they monitor opportunities and threats throughout
the year and review their practices to continually improve
service levels to our customers. These plans drive our
investment in our facilities as we adapt our product ranges
and service levels to meet customer demands, which
includes operating 24 hours a day, 5 days a week.
We will continue to look to develop new markets, both
organically through our depot network, or by acquisition
where the opportunity arises. This year we acquired
Sarcon (No 155) Limited trading as IJK Timber Group
which provides two new depots in Northern Ireland
to complement our business currently done in Ireland
through Abbey Woods, in the Republic of Ireland, and
via Leeds. We have also launched an online website for
customers to place orders and obtain information about
their account and our products 24/7.
Our staff are a major asset for the company, and we
continue to invest in training to ensure that we have the
best operations, sales and technical teams in the industry.
Marketing of our products is done through brochures, direct
advertising, public relations, social media and exhibitions
and we use multiple channels to communicate clearly with
our existing and potential customers, fully complying with
our responsibilities under the Data Protection Act.
Digital Showroom in Action.
We have developed a new specification website
promoting our product offering to professional specifiers,
architects and designers. This has been received well by
these professionals and is proving to be beneficial, gaining
orders and specifications for a wide range of products on
display from our key strategic suppliers. We also put in
place a programme of presentations to architects for their
Continual Professional Development.
Digital media has provided the company with the
opportunity to increase brand awareness across a
wide range of social media platforms including the
introduction of a series of short videos available on the
www.lathamtimber.co.uk website. We have centralised
our sampling service in Leicester to provide a more
efficient service with greater visibility to follow up the
sales leads that this produces.
COVID-19 has brought about a new way of working, with
less face to face visits and an increased use of technology
to engage with our customers and suppliers, from video
conferencing tools to the development of digital media to
promote and explain our products.
We value the personal relationships developed with our
suppliers, staff and customers. Working with our staff
and suppliers we aim to offer our existing and potential
customer base a first class service of fit for purpose, legal
and sustainable products, delivered in a timely manner.
JAMES LATHAM PLC ANNUAL REPORT 2022
7
Strategic Report
Corporate Responsibility
Principle 2 – Seek to understand and meet shareholder needs and expectations.
Nick Latham and David Dunmow are responsible for
maintaining good communications with shareholders.
This includes our published financial statements and
Stock Exchange announcements, which are also posted
on to our Investors website, www.lathamtimber.co.uk.
We allocate at least three days a year for Investor Roadshows
organised by our broker, SP Angel, where investors have
the opportunity to discuss our strategy and their own
expectations. In addition we occasionally host shareholder
visits to our depots with a guided tour of the facilities to
increase their understanding of our business. Shareholder
feedback and significant movements in our shareholder base
are regularly discussed at board level, and their views are
considered as part of our decision making processes.
Principle 3 – Take into account wider stakeholder and social responsibilities and their
implication for long-term success.
increasingly paying attention to the embodied carbon
in the building. Using timber as a building material helps
offset carbon emissions as timber is carbon negative.
Sourcing wood from sustainably managed forests
maximises CO2 absorption and stores more carbon.
In addition, sustainably managed forests increase
biodiversity and increases forestation. Forest stewards
manage the landscape to prevent damage to the
eco-systems, water courses, wildlife and the trees
themselves. This system takes a long term view of the
forest resource to ensure that they will last for
generations to come.
At James Latham plc, we are conscious of our corporate
responsibilities to all our stakeholders and to society as
a whole. Environmental matters, health and safety, staff
training and equal opportunities are key areas relevant
to the group’s business. We also maintain contact with
and support both the local and the wider community.
A substantial amount of management time is devoted to
Corporate Social Responsibility issues, as we believe that
these enhance our standing with customers and suppliers
to the benefit of all stakeholders.
Environmental
The directors of James Latham plc recognise that the
company has a responsibility to the environment,
customers, suppliers, shareholders and staff to base its
commercial activities on well-managed forests and to
reduce any negative environmental or social impact of
its trading as far as is reasonably practical.
The UK Government is committed to becoming
net-zero carbon by 2050. The legislation intends to
dramatically reduce Greenhouse Gas Emissions and any
remaining emissions are offset, neutralising environmental
impact and slowing climate change. One of the routes
to achieving this, is by reducing carbon emissions from
construction.
Construction is responsible for 40% of the UK’s total
carbon footprint, and so construction companies need
to look at the choice of materials and construction
methods used, as well as the energy efficiency of the
buildings. This has led to architects and specifiers
8
JAMES LATHAM PLC ANNUAL REPORT 2022
Strategic Report
Corporate Responsibility
To support this, we ensure our timber is legally harvested
and comes from well managed forests. We recognise
that the independent certification of forests and supply
chains is the best means of providing assurances of this.
As well as providing assurances on the timber itself, these
schemes also provide checks on the welfare of the forest
workers and indigenous population.
In some parts of the world, timber certified by one of
the internationally recognised schemes is not available.
In situations such as these, we are committed to
purchasing all timber from legal sources and to seek
confirmation that suppliers are operating in accordance
with the laws of their country.
The Timber and Timber Products (Placing on the Market)
Regulations (“UKTR”) places an obligation on the first placer
of timber on the British market to ensure that the timber
has been legally sourced and traded. Compliance requires
operation of a due diligence system, assessing risks and
implanting mitigation measures to ensure that only negligible
status product can enter the supply chain. In 2020, an
Office of Product and Safety Standards audit of our due
diligence systems found that we were fully compliant with
the European Union Timber Regulation No 995/2021.
For a number of years we have had risk assessment
tools in place to monitor suppliers through the Timber
Trade Federation Responsible Purchasing Policy and
Code of Conduct. The risk assessment
seeks to provide the clearest practicable
information regarding the sources of
raw material used in the manufacture of
wood products.
We publish our commitment to the environment regularly
in literature and on our website, www.lathamtimber.co.uk.
We give clear guidance to our customers about the
importance of buying timber that can be demonstrated to
be legal and from well-managed forests. This is a condition
of contract to supply the UK Government and many
environmentally aware customers. Company staff regularly
give presentations on these topics to trade associations
and to customers.
JAMES LATHAM PLC ANNUAL REPORT 2022
9
Strategic Report
Corporate Responsibility
Garage Doors in European Oak by Gadgets Joinery.
Supply chain transparency – Modern Slavery
Act 2015
We are dedicated to promoting ethical values and
integrity in our business behaviour by implementing
controls through ISO management and due diligence
systems. We are committed to taking all reasonable
efforts to prevent human trafficking and slavery within
our trading and operational purchase supply chains.
Our Modern Slavery Statement is updated annually and
is available on our website www.lathamtimber.co.uk.
Energy and our Carbon Footprint
We recognise that alongside our timber environmental
policy, we have a responsibility to minimise our local
environmental footprint.
We have developed an environmental management
system which is accredited under ISO14001. This
commits us to considering energy efficient options for
lighting, heating and ventilation and transport, before
making purchasing decisions. Our Carbon data is shown
in the table below:-
Carbon Dioxide Equivalent (CO2e) tonnes
Scope 1
Direct emissions from burning gas and solid fuel for heating and from
road use for sales and distribution
Scope 2
Indirect emissions from use of electricity
Total
Total kWh
Global Intensity Ratio
Tonnes of CO2 from scope 1 and 2 per £m of turnover
Tonnes of CO2 from scope 1 and 2 per thousand m3
Data shown is for the calendar years 2021,2020 and 2019.
2019
2020
2021
4,114
3,466
4,369
264
4,378
202
3,668
301
4,670
18,392,940
15,815,599
20,346,194
17.62
11.20
14.86
8.80
12.98
9.69
10
JAMES LATHAM PLC ANNUAL REPORT 2022
Strategic Report
Corporate Responsibility
Scope 1 and 2 emissions are calculated from billing data
received from our power and fuel suppliers, and converted
using conversion factors published by the UK Government.
This includes data from our Irish operations.
We have continued our investment in LED lighting,
with two more depots having their lighting upgraded.
With more of our depots working overnight, efficiency
of the lighting is important.
All our HGV’s are fitted with vehicle trackers, monitoring
efficiency of route planning and on driver behaviour
patterns. We regularly review the availability of electric
HGV’s, and as these become available and suitable for our
multi-drop style of delivery, we will look to adding these
to the fleet.
Having updated our company car policy, the aim
is to increase the numbers of energy efficient cars
including plug-in hybrid and fully electric cars. When the
infrastructure in place allows and where appropriate we
will apply these rules to all our fleet as they are replaced
on an ongoing basis. In addition, we have reduced business
travel and many meetings now take place online via
videocalls which contributed to 72% reduction in energy
usage between 2020 and 2021. When we compare data with
the 2019 figures, the reduction is even more impressive.
Our data suggests we reduced fuel usage on business
travel up to six times.
We invested in an additional four electric combi trucks
last year to assess their performance and carbon saving
and we have a further nine on order. We are now adding
them as the preferred Combi model to purchase where
circumstances allow. We have signed up to use BioLPG
fuels, guaranteeing 40% of our supply with a ‘Green Gas
Certification Scheme’, which is fully traceable and third
party verified. We also purchase 100% biomass renewable
electricity which produces 86% less carbon than coal-
generated power.
We have invested in new eco-friendly dust extraction
system Ecogate at Dresser Mouldings. According to the
manufacturer’s calculations we have managed to reduce
electricity consumption by 124,132 kWh in the first year.
Total annual energy use of 20,346,194 kWh is further
analysed in the graphs below.
2.5%
7.0%
3.6%
2021
Calendar
Year
65.7%
20.2%
0.9%
0.1%
Electricity - 1,418,451 kWh
Cars Diesel - 179,893 kWh
Natural Gas - 741,980 kWh
LPG - 4,114,379 kWh
Cars Petrol - 60,058 kWh
HGV’s Diesel - 13,364,325 kWh
Gas and Fuel Oil - 467,108 kWh
5.5%
4.4%
2020
Calendar
Year
66.4%
22%
1.6%
0.1%
Electricity - 864,802 kWh
Cars Diesel - 252,420 kWh
Natural Gas - 700,527 kWh
Cars Petrol - 8,126 kWh
LPG - 3,482,410 kWh
HGV’s Diesel - 10,507,314 kWh
As a distribution company, the majority of our emissions
are from our vehicles. These are increased this year mainly
due to the increase in revenues and the recovery from the
COVID-19 pandemic which affected the figures for 2020.
We have continued to encourage working from home on a
hybrid basis where this is possible for the efficient running
of our operations. The reduction in the Global Intensity
Ratio shows that progress is being made in reducing our
CO2 emissions.
JAMES LATHAM PLC ANNUAL REPORT 2022
11
Strategic Report
Corporate Responsibility
Newly refurbished Gateshead Depot.
The Carbon Story
The growing interest in ‘Net-Zero Carbon’ construction
is very significant to us. Timber performs fantastically
when compared to Carbon Dioxide (CO2) intensive
materials such as concrete or steel which release CO2 into
the atmosphere during production. Conversely, timber
produces no CO2 during its growth, instead removing
carbon from the air and locking it away for its lifetime.
With this in mind, our compliance team worked with
the Biocomposites Centre at the University of Bangor to
develop a unique calculator that could measure not only
the carbon locking potential of our products, but also the
carbon footprint created by their production, transport and
storage at our facilities. Not only is this data available to our
customers, but we also rank (1-4) the confidence we have
in the data and the sources it was taken from. With a broad
portfolio of products from around the world, this ranking
not only provides peace of mind for our customers, but
also encourages lower ranked suppliers to improve the
documentation available for us to make these calculations.
Our press launch of the calculator at the sustainable
construction event ‘Futurebuild’, featured a lecture theatre
built within elements of a real house constructed from
our most carbon conscious products, by Zero Carbon
construction pioneers ‘Kiss House’. At the end of the event,
the house components were dismantled and transported
to a Kiss House site where they will form part of the very
first Passive House to be constructed in Reading, Berkshire.
This innovative, environmentally conscious approach to an
exhibition stand led to the organisers awarding us the title
of ‘Best Sustainable Stand’ for the event.
Waste Disposal
We seek to minimise the use of packaging material and
to recycle discarded packaging material and paper
where it is practicable to do so, to avoid these materials
entering landfill. We have seen a good improvement in
reducing the amount of waste reaching landfill, as set
out in the table below.
Waste to landfill and diverted from landfill
2017
2018
2019
2020
2021
Landfill (tonne)
390
371
156
87
121
Diverted from
landfill (tonne)
562
479
681
707
838
Total waste
952
850
837
794
959
Diverted from
landfill
59%
56%
81%
89%
87%
Whilst every effort has been made to ensure data is consistent
across the years, there are some differences in collection methods
across this period.
12
JAMES LATHAM PLC ANNUAL REPORT 2022
Support of our communities
We are all aware of the extent to which the NHS has been
tested over the course of the COVID-19 pandemic, and
those working on the frontline are only too well aware of
the need to take time out and consider their own wellbeing
in the midst of it. The crew at Walthamstow Ambulance
Station asked us for assistance to help create a wellbeing
garden for not only their own team, but also other local
NHS staff to spend some time to relax, refocus and
re-energise ahead of another challenging shift. Featuring
seating, flower beds and a large mural painted by a local
graffiti artist, we were delighted to donate Medite Tricoya
Extreme to this very worthy project.
Lincoln’s Little Heroes project, started by TV personality
and Architect George Clarke in 2020, aims to bring a
little light relief to children in the Lincoln area who were
undergoing cancer treatment, were immunosuppressed
or shielding during the pandemic. As the children were
unable to leave their homes, the organisation delivered
presents, good will parcels and Christmas cheer to the
doorstep of those affected. We donated Oak veneered
MDF which, via the skilled students of Lincoln University
Technical College, became Christmas decorations and
ornaments for the families involved. We have been involved
in this project since its inception and hope to continue our
support for many years to come.
The Rycotewood Furniture School is one of the UK’s most
prestigious furniture colleges and has launched the careers
of many high-profile furniture makers. The company has
a long-founded relationship with the school and have
donated various species of hardwoods for students to
explore in the past. This year, however, they were looking
Medite Tricoya Extreme Walthamstow ambulance mural.
Strategic Report
Corporate Responsibility
to push the boundaries of what their students could
achieve, so asked us if we had any novel new materials
they might try out. Under the guidance of renowned
furniture designer Fred Baier and with a focus on his
signature curves and colours, we provided a selection
of brightly coloured materials that could be shaped,
thermoformed or carved to produce storage furniture
for their first year show. Products such as HI-Macs®
Solid Surface, Valchromat coloured MDF and Wisa Grada
Thermoformable plywood went into a number of designs,
allowing the cohort to consider alternative materials and
approaches to furniture production.
We continue to support the
National Forest project in Central
England, which started with
the planting of 250 trees to
celebrate the company’s 250 year
anniversary in 2007 and continues
with further plantings and
woodland management activities
for customers, suppliers and staff.
Health and Safety - Providing a safe working
environment
The handling of timber and panel products, both manually
and mechanically, and the stacking and storage of these
products at height, can be dangerous activities. We are very
active in assessing and minimising the risks in all areas of
the business and educating the workforce to provide as
safe a working environment as possible for all people that
come into contact with James Latham plc.
In March 2020, the onset of the COVID-19 pandemic
brought with it new challenges for all our staff to work in
a safe environment. Our disaster recovery plans kicked
in with all key sales staff and administration being able to
work from home with computer and telephone access
throughout the group. For those operations staff who
could not work from home we introduced new COVID-safe
working procedures and social distancing rules that are
continually updated following government guidelines.
The majority of our staff are now back to work in our offices
as before with some flexible working policies introduced to
allow working from home where appropriate.
We employ a full-time Health and Safety Manager who
reports to the board regularly, attends board meetings
twice a year and chairs health and safety meetings at
all depots. We have a 3-year action plan and all sites
are subject to audit, with their audit scores and trends
being monitored at quarterly management meetings.
JAMES LATHAM PLC ANNUAL REPORT 2022
13
Strategic Report
Corporate Responsibility
Management and employees are actively involved in
improving our safety record, which is high on everyone’s
agenda. All employees take a personal responsibility for
making sure their actions and behaviour maintain safety for
all and we encourage reporting of “near misses” to enable
us to constantly improve our safety systems.
In addition, we recognise that safety extends beyond our
warehouses. We regularly monitor vehicle accidents in
our lorries and company cars to assess whether further
training is required. We operate a programme of lorry
driver mentoring and are members of the Road Haulage
Association who carry out yearly audits to make sure we
are operating safely and efficiently. Our lorries all have
tracking devices fitted which provide alerts and information
on speed and the route taken, as well as cameras and side
scanners to not only provide live footage for training and
insurance purposes, but also to provide improved rear
and side visibility to our drivers, minimising blind spots.
We undertake driving licence verification checks on a
regular basis for all our drivers. The latest technology
allows us to monitor driver behaviour not only from a
safety aspect but also from an environmental aspect,
minimising fuel use by efficient routing.
Our employees
The group’s ability to achieve its commercial objectives
and to serve the needs of its customers in a profitable and
competitive manner depends on the contribution of its
employees. Employees are encouraged to develop their
contribution to the business wherever they happen to
work. The group regularly keeps employees up to date
with financial and other information.
We undertake staff surveys and have worked on the key
areas arising from the survey to improve our strategies
on issues including staff retention, communication,
succession planning, training and development for all
employees. We plan to continue to use this tool on
an ongoing basis to continue to improve the working
environment for all staff as well as improve the quality of
service that they offer to our customers.
Quarterly meetings are held in each location, chaired by
a board member, where employees’ views concerning
the performance of their profit centre are considered.
To encourage the involvement of employees in the
group’s performance, share option schemes are operated
together with bonuses linked to performance.
14
JAMES LATHAM PLC ANNUAL REPORT 2022
The group’s employment policies do not discriminate
between employees, or potential employees, on the
grounds of age, gender, disability, sexual orientation,
colour, ethnic origin or religious belief. We would make
every effort to enable employment to continue for any
employees that become disabled. The sole criterion for
selection or promotion is the suitability of any applicant
for the job. The group’s pay policy is to ensure that every
employee, other than apprentices, are at or above the
Real Living Wage.
We have a successful program of introducing trainees
from school or college. Trainees are put through external
courses obtaining qualifications, including NVQs in Sales
and Warehousing and the Wood Science exams covering
the properties and uses of timber and panel products.
Details of the number of employees and their related costs
can be found in note 4 to the accounts, and key decisions
taken which have considered the employee interests are
set out on page 5.
Strategic Report
Principal Risks and Uncertainties
Principle 4 – Embed effective risk management, considering both opportunities and
threats, throughout the organisation.
All business involves taking risks, both general risks of
trading and risks specific to our industry and the market in
which we operate. These risks change and evolve and our
risk management processes help us to deliver our strategic
objectives over the medium term by adopting appropriate
strategies and maintaining strong systems of internal control.
These strategies however do not attempt to eliminate risk,
but control the risks that we believe are appropriate to
take to generate acceptable shareholder returns, without
affecting our ethos on environmental and health and safety.
The risk reporting framework is designed so that
information is passed in both directions, up and down the
company’s structure. A central risk register is maintained
by the board and reviewed at least once a year by the Audit
Committee. These risks are fed down to the depots, who
add their own risks specific to their sites. Risk mitigation is
discussed in every board meeting at depot and group level
and reported back to the board. Any new or increased risks
identified through this process are communicated to all
depots for monitoring and action.
Business operations are controlled by the site director at
each location and they are responsible for training of their
staff, local controls including Quality Systems and service
levels, monitoring KPI’s and ensuring group policies are
adhered to. These controls are monitored at the quarterly
board meetings. Central functions such as health and safety,
insurance, IT, credit control, finance and HR are controlled
by the executive boards of James Latham plc and Lathams
Limited, who are responsible for assessing these risks and
setting policies and procedures and ensuring that adequate
training is given. Internal audit activities, such as Health
and Safety audits, financial internal audits, Environmental
Chain of Custody audits and Quality System audits
provide assurances to the board that policies have been
implemented properly and are being adhered to.
We have considered below the current risk factors that
are considered by the board to be material. However in
a changing world, new risks may appear or immaterial
risks may become more important, and the directors will
develop appropriate strategies as these risks appear.
In the year to 31st March 2022 the risk environment
changed significantly with Supply Chain risks increasing
due to both the effect of the COVID-19 pandemic affecting
Global Supply Chains and the conflict in Ukraine. Brexit,
Cyber Security and Key Man risks have also been considered.
We have considered below the key inherent risks and the
risk mitigation measures that we have introduced.
Market Conditions
Risk Status – High
Description
The group’s sales are predominantly UK based, but with an
increasing presence in the Republic of Ireland. It is exposed to
any slowdown in the UK or Irish economy. Negative or uncertain
economic conditions could affect our customers’ business
resulting in them reducing purchases from our group.
Risk Direction – Increasing
Mitigation
The distribution of our customers across the UK and Irish economic sectors
helps reduce the impact of slowdown in any one sector. Regular financial
information helps the board assess current trends.
Our depots keep in close contact with our customers and discuss with them
how market conditions are affecting their business. This year this has focussed
on understanding how difficulties with Supply Chain and increases in cost prices
and cost of living is affecting them.
Competition from new and existing businesses
Risk Status – Low
Risk Direction – Unchanged
Competitive pressures from existing businesses and new entrants
to the market could reduce prices, margins and profitability.
Changes in customer purchasing habits may lead to different
routes to market.
An assessment of the market and competitor activity is discussed at each
depot’s quarterly board meeting. This includes an assessment of our routes
to market as challenges to our depot structure and operations emerge and
assessment of our pricing strategies.
Investment in improving on-line trading platforms and other digital methods to
meet customer demand.
Continued overleaf
JAMES LATHAM PLC ANNUAL REPORT 2022
15
Strategic Report
Principal Risks and Uncertainties
Inventory levels move out of line with sales requirements and market prices
Risk Status – Medium
Risk Direction – Increasing
Product shortages can lead to high prices and over purchasing
throughout the trade, resulting in excessive stock holding.
Weaker prices lead to stock reduction throughout the supply
chain, which magnifies the reduction in demand and then leads
to even sharper falls in price. Erratic shipments can result in
stock excess and shortages in specific special products.
To mitigate this risk, the group has a strict policy of stock level targets by product
group and depot. These are monitored monthly by the board which centrally
controls the purchase of stocks and takes a group view on the action to be taken
to limit the group’s exposure to rapidly changing price levels. Live stock level
reports and predictive tools are available for our managers to monitor current and
future levels.
The market for certain product lines changes, resulting in them
becoming overvalued and slow moving or obsolete.
The Global Supply Chain difficulties may cause demand for
some products to switch to alternative products.
The group’s reduced reliance on commodity items has reduced this risk of over
exposure to low value, high volume and price sensitive items, although as an
important area for us, this risk cannot be completely removed.
The board has set strict guidelines relating to purchases where the specification
is unique to a particular customer, and has policies in place to ensure that no
individual can commit the group to a purchase greater than his/her authorised limit.
Slow moving and obsolete stocks are monitored regularly and action taken to
mitigate the risk.
Close contact is maintained with customers so that the effect of Global Supply
Chain difficulties is known and we can adjust inventory levels as appropriate.
This year we have been holding more stock than normal to ensure that our
customers continue to receive reliable supplies from us.
Supply Chain disruption could result in shortages of product
Risk Status – High
Risk Direction – Increasing
Although far more of the group’s purchases now come from
Europe and North America, it has significant dealings with
countries where the political climate is less stable, resulting in
a strategic threat to the supply of product to the group.
The group is reliant on certain suppliers for certain product
ranges and their inability to meet our demand due to financial
or production difficulties could result in stock shortages.
To mitigate the risk from these pressures, the group’s dealings are spread across
a large number of countries of supply. The group keeps informed of developments
in higher risk producer countries.
We maintain close relationships with our suppliers, including ports and shipping
lines, to ensure that we are pre-warned of difficulties of supply. We maintain
relationships with suppliers of alternative products.
We also maintain close relationships with customers to help them find alternative
sources of supply.
Reputational Risk
Risk Status – Low
Risk Direction – Unchanged
Over many years the group has built up a reputation for integrity
and responsible trading and is aware that this can be easily
damaged with the consequential cost to the Latham brand.
Policies are in place which cover standards of behaviour and good governance.
On the purchasing side the group has a strong responsible purchasing policy
managed by our Environmental Manager to minimise possible damage to its
reputation and legal risk from dealing in illegal products.
Defined Benefit pension scheme funding could increase
Risk Status – Medium
Risk Direction – Unchanged
The group is required by law to maintain a minimum funding
level in relation to its obligations to provide pensions to
members of the pension scheme. This level of funding is
dependent on a series of external factors, such as investment
performance, life expectancy and gilt yields. Significant changes
in these areas can also have a significant effect on the funding
levels. The sensitivity of the funding level to these factors is
disclosed in note 20.2 in the notes to the accounts.
The scheme has been closed to new entrants for many years. The board regularly
reviews the investment strategy and performance of the pension scheme
investments, and has set a cap on pensionable salaries of 1% above CPI.
Long term investment strategy is to reduce allocations to growth assets and
increase allocations to defensive assets to reduce risk and volatility, and a plan
is in place with the Trustees to reduce risk in line with the changing maturity of
the scheme.
16
JAMES LATHAM PLC ANNUAL REPORT 2022
Strategic Report
Principal Risks and Uncertainties
Information technology failures impact our ability to trade
Risk Status – Medium
Risk Direction – Unchanged
The operations of the group depend to a large extent on
the availability and reliability of our information technology
systems. A failure of systems, either of hardware, software or
communications, for an extended period of time could impact
our ability to trade.
Our main computer servers are located in a secure site away from the trading
operations, hosted in an external data centre. The systems are monitored 24 hours
a day and maintenance work carried out on an ongoing basis. The infrastructure is
regularly reviewed and updated.
Back ups are held offsite in a separate data centre to provide extra resilience.
Should there be any failure in the systems in the main datacentre, then the back
ups held in the secondary data centre can be made operational. Regular disaster
recovery tests are carried out.
Software maintenance contracts ensure that our business critical software is up
to date, allowing software problems to be resolved quickly.
Cyber Security and Data Protection
Risk Status – Medium
Risk Direction – Increased
The risks of Cyber attack, including Ransomware demands
are increasing, and may lead to disruption to business and loss
of data.
Cyber training is carried out on a regular basis and for each new employee as part
of their induction process. We have also continued to improve our Cyber security
systems. Our IT disaster recovery plans include provisions for Cyber Attack.
Theft of data relating to employees, customers and suppliers
could result in a regulatory breach under GDPR.
Our GDPR policy is regularly reviewed and we ensure that our marketing activities
are appropriately carried out.
Inability to trade from a depot
Risk Status – Low
Risk Direction – Reduced
Inability to trade from a depot due to an incident, internally or
externally, or the effects of a pandemic, could cause loss of
revenue and profits.
Disaster recovery plans are in place at group and depot levels. These are
reviewed by the Audit Committee and the board, as well as discussed at depot
level. Insurance policies are in place to cover increased cost of working.
Our distribution network, as well as our inventories held at various ports, allow
us to manage customers requirements from a different location.
The COVID-19 pandemic helped us improve our disaster recovery plans, with
more remote working and improved staff hygiene safety and wellbeing protocols
being introduced.
Inability to fill key roles within the organisation
Risk Status – Low
Risk Direction – Reduced
Our staff are key to the success of our business, and our
inability to fill key roles could affect our profitability.
The group, through the Remuneration Committee, is committed to having
remuneration, training and development policies to make James Latham the
employer of choice. Benchmarking takes place to ensure our senior staff are
rewarded appropriately.
Significant time is spent on identifying and training the leaders of the future,
with our Trainee and Talent Pool programmes. The group also makes sure
that continuity planning is considered by each senior employee. A dedicated HR
manager has been employed to oversee this.
JAMES LATHAM PLC ANNUAL REPORT 2022
17
Strategic Report
Key Performance Indicators
The group monitors its performance against the following Key Performance Indicators that we believe best reflect our
performance and progress in achieving the company objectives outlined on page 6.
To maximise shareholder value over the medium term
2022
2021
2020
34.0%
2022
51.7%
14.5%
12.9%
2021
0.8%
2020
1.0%
0
10
20
30
40
%
0
10
20
30
40
50
60
Return on Capital Employed, defined as Operating
profit divided by Net Assets plus Non Current
Liabilities less non current pension and deferred tax
asset, has improved by 19.5 percentage points.
Like for like revenue, adjusted for the effects of
acquisitions and working days, increased 51.7%.
Carbon Emissions
Calendar Year
2021
2020
2019
To provide a safe working environment for our staff
9.69
2022
4.18
0.40
8.80
2021
5.45
0.67
11.2
2020
7.77
0.73
Accident
Reportable
%
7
8
9
10
11
12
0
2
4
6
8
10
12
14
Carbon emissions shown as Tonnes of CO2 from
Scope 1 and Scope 2 per thousand m3
(see page 10).
Total number of injuries, no matter how minor, and
total number of reportable injuries reported per
100,000 hours worked, show a reduction as a result of
our continued focus on health and safety.
To improve service levels by improving warehouse facilities to speed order picking over
an extended product range
2022
2021
2020
Tonnes
1,189
1,073
1,018
2022
2021
2020
Times
5.8
6.2
6.2
800
900
1,000
1,100
1,200
4
5
6
7
Weight of product sold per working day
continues to increase.
Stock turn, based on volumes, is below our budget
of 6.25 times due to some increased stock on water
due to supply difficulties.
18
JAMES LATHAM PLC ANNUAL REPORT 2022
Strategic Report
Operating Review
Results for the year to 31 March 2022
Revenue for the year ended 31 March 2022 was £385.4m,
£135.2m higher than the previous year.
Our results reflect increased activity levels across the
timber sector of the economy as a whole. They highlight
the agility and market awareness of the James Latham
management team throughout all the challenges that
have been thrown at our industry over the last few years
including Brexit, the COVID-19 pandemic, supply chain
difficulties and increasing cost prices.
Global demand for timber products was very strong coming
into this financial year with global demand, especially from
the USA, outstripping supply. This caused prices for all
timber products in North America to rise sharply. European
manufacturers targeted this market leading to some gaps
in supply across Europe. Our good relations with our key
suppliers allowed us to negotiate monthly volumes, but
there was in general a shortage of available supply.
The increase in demand was accompanied by continued
supply chain disruption. There were delays at the port
discharging goods and disruption in shipping lines.
Containers were often in the wrong parts of the world,
and so shipments altered from container to break bulk
vessels. This had a knock on effect on the ports in the UK,
where offloading a break bulk vessel takes considerably
longer. These delays in making these products available not
only causes an increase in demurrage costs, but increases
our inventory levels at the port to compensate for this.
Nightshift staff at Leeds Depot.
This disruption continued throughout the financial year
and will take some time to unwind.
The appalling conflict in Ukraine and trade sanctions placed
on Russia and Belarus will cause further disruption with
timber supply across Europe and will impact on our own
business, particularly with Russian Birch Plywood. The conflict
and sanctions will also affect the supply of oil and other
raw materials which are key manufacturing components.
We stopped purchasing material from these regions at the
outset, identified the areas this will affect and have already
started to source alternatives for our customers. The long-
term effect of these sanctions on the timber business in
Europe is yet to be clear. With our broad range of suppliers
and products we should be able to offer customers a solution.
Buffalo Board exclusive to James Latham.
JAMES LATHAM PLC ANNUAL REPORT 2022
19
Strategic Report
Operating Review
Bespoke cabinetry by David L Douglas.
Despite all the distractions and demands during this
financial year, our excellent relationships with our suppliers
and our ability to increase levels of inventory where
necessary, have enabled us to meet the demands of our
customers whilst maintaining service levels. Like for like
revenues improved by 51.7%, of which 12% is volume
related with the balance being down to price increases and
changes in product mix.
have improved efficiency, allowing us to increase machining
capacity by 25% and improving service levels. The key area
of growth this year has been in the traditional range of
mouldings and beads, although we have also embarked on
some special projects working with architects and designers,
using our CNC machines. With the investment in machinery
we are also looking to further develop coated and brushed
finishes to give us a unique offering into the UK market.
We have seen the majority of the volume increase coming
from the commodity markets at the start of the financial
year. This demand for commodity products weakened in
the second half of the year when we started to see a good
increase from the decorative and timber manufacturing
sectors. This highlights the importance of our product range
and ability to adapt to the changes in market conditions.
We continued to invest in our business, with new racking
systems installed in Thurrock to enable us to stock a wider
range of products, and plans to expand the depot in Yate.
The investment in our Dresser Mouldings business
continued with phase one of our investment in new
machinery, including Weinig Moulders and Multirips,
completed in the year as well as improving the staff welfare
facilities which has been welcomed by all. These machines
20
JAMES LATHAM PLC ANNUAL REPORT 2022
Bench in stained White Ash by Sean Evelegh.
Strategic Report
Operating Review
In October 2021, we acquired the entire share capital
of Sarcon (No 155) Limited, which are the trades of IJK
Timber Group and Northern Hardwoods, trading out of
Northern Ireland. The integration of this business into
Lathams Limited has gone well, and it provides us with
a base in Northern Ireland to expand our panel business
into Ireland and complement our timber business in
Abbey Woods in the South.
Service levels with our customers have remained high,
despite difficulties with obtaining hauliers both from the
ports and our suppliers. We are training more of our staff to
be LGV drivers and increasing our fleet of vehicles. We have
continued to extend the operational hours of our sites and
increased the number of sites that are working 24/5.
For management purposes, the group is organised into
one trading entity, importing and distribution of wood
based and related materials, carried out in each of the
sixteen locations trading in the United Kingdom and the
Republic of Ireland. Within this one segment performance
in terms of revenue and trading margin of the main
product types are considered below. The separate
segment of timber processing, through Dresser Mouldings,
is considered immaterial and not separately disclosed.
Market place
The group’s business is widely spread throughout many
sectors of the UK economy.
Market sector
Customer group Lathams
sales value %
Construction/
housing
Merchants
Joiners
Builders
Kitchen manufacturers
Door manufacturers
Retail
Shopfitters
Laminators/Veneerers
Furniture manufacturers
Transport
Vehicle builders/Van liners
Exhibitions
Exhibition fitters
Cash sales
Other importers
Other sectors
2022
2021
16
24
17
25
5
6
5
4
5
6
1
1
10
8
9
4
5
4
3
4
6
1
1
11
8
11
TOTAL
100
100
The group’s strategy continues to be to target specific
market sectors on both added value, core and premium
grade product and to provide product solutions for
our customers.
End products are used in both the public and private
sectors. Our top ten customers account for 9% (2021: 9%)
of sales and our top 25 customers represent 14%
(2021: 14%) of sales.
Kiss House making moves
in construction
Sustainable construction
pioneers Kiss House partnered
with James Latham to specify
materials for their ground-
breaking modular, Low Carbon,
Passive House. Jointly unveiled
at Futurebuild 2022, the project
went on to win ‘Best Sustainable
Stand’ at the event. True to the
sustainable nature of the homes,
the entire display module was
then uninstalled and shipped to
Berkshire where it forms part of
the first Passive House to be built
in Reading.
JAMES LATHAM PLC ANNUAL REPORT 2022
21
Strategic Report
Financial Review
Financial review
A commentary on the group’s trading results is set out
in the Operating Review on pages 19 to 21, and the key
figures are considered below, with emphasis on the
financial results.
Revenue Analysis
Revenues have grown significantly this year, up 51.7%
on a like for like basis against the year to 31 March 2021.
This revenue growth was across all of our depots and
reflected both a recovery from the effects of the COVID-19
pandemic and increasing cost prices and supply chain
disruption causing shortages in many of our products.
These shortages were controlled carefully to ensure
continuing supplies to our traditional customers, but
our strong supply chains meant that there were also
opportunities to gain market share.
Revenue Growth Analysis
Volume
Price and Product Mix
2021
2022
+7.2%
-6.4%
+11.9%
+39.8%
Like for Like Revenue Growth
Acquisitions
Trading Days
+0.8%
+0.8%
-0.4%
+51.7%
+3.6%
-1.2%
Total Revenue Growth
+1.2%
+54.0%
Half Yearly Revenue Analysis
Half 1
Half 2
2021 vs 2020
2022 vs 2021
-14.8%
+17.8%
+81.2%
+33.7%
Operating profit
The board remained focussed on managing margins
to enable us to remain competitive in commodity
products but grow margins in our focus products and
other products where there were market shortages,
whilst still maintaining our service levels. Gross profit %
has increased to 23.8% from 18.0%. The unprecedented
rise in cost prices, and their effect on the unit price that
we sell our products at, resulted in some short term
increases in gross margin %.
22
JAMES LATHAM PLC ANNUAL REPORT 2022
David Dunmow
Finance Director and Company Secretary
Warehouse costs, which are included in the calculation of
gross profit, have received continued investment in racking
systems and manpower to extend the working day to meet
customer demands. Most depots have two or more shifts
in their working day, with one further depot operating a
24 hour system, making six in total. This means we can
take orders later in the day to provide next day deliveries
where our customers require it.
Costs in each location are monitored closely by the board
through the quarterly meetings at each depot, with detailed
variance analyses being provided. We constantly look for
efficiencies in our overheads whilst continuing to invest for
the future. Transport and warehouse costs per tonne have
increased by 13.4% (2021: decreased by 2.1%) and 5.7%
(2021: decreased by 10.0%) respectively. There have been
inflationary pressures on these costs, including increases in
fuel prices, and wage pressures caused by the shortages in
drivers and operations staff.
Operating profit increased 205.5% to £58.2m from £19.0m
last year. Group net profit before taxation increased to
£58.0m from £18.6m last year.
Taxation
Our strategy in managing and controlling our tax affairs is
to ensure compliance with all applicable rules, legislation
and regulations under which we operate. We maintain an
open and co-operative relationship with the UK and Irish
Tax Authorities, and pay the correct amount of tax as it falls
due. Our tax strategy document is available on the James
Latham plc Investor page under Corporate Governance.
Strategic Report
Financial Review
The taxation charge of £12.3m represents an effective rate
of 21.2%, compared with 19.4% last year. The group’s
profits arise mainly in the UK and the group’s tax charge
will reflect the UK corporation tax rate, currently 19.0%.
The rate of UK corporation tax rate will rise to 25% with
effect from 1 April 2023.
Earnings per share
The group reported a total profit after tax of £45.6m
(2021: £15.0m) resulting in a basic earnings per share of
229.3p (2021: 75.4p) with diluted earnings per share being
228.3p (2021: 75.2p).
Pension scheme
At 31 March 2022 there was a surplus in the
defined benefit scheme under International Financial
Reporting Standards of £1.1m compared with a deficit
of £5.9m last year (Restated – see note 20.2). Discount
rates, represented by yields on corporate bonds increased
to 2.7% from 2.1%. Assets under management have
shown good growth, increasing by £6.7m to £75.5m.
The company continued to pay in £3.4m of deficit recovery
funding which will continue until March 2024 when the
deficit recovery funding payment will be recalculated
following the next triennial valuation. In note 20.2 to
the accounts, we have provided some sensitivity analysis
around the various assumptions used to illustrate this
volatility and details of the IFRIC 14 liability.
The group is constantly assessing the risks in the pension
scheme, especially more of the members are at or close to
pensionable age, and this year has taken the opportunity
afforded by good equity values to derisk and invest more
in gilts and bonds. A full investment review will be carried
out during 2022. We also maintained a cap on pensionable
salary increases to a maximum of 1% over CPI.
Gross IAS19 deficit £000’s
2022
1,119
2021
2020
2019
2018
5,933
11,812
8,714
8,382
Cash flow and working capital
At the end of the year cash balances of £37.0m were
held, up from £28.6m last year. The cash is being held
as short term deposits providing funds for short term
working capital fluctuations and allowing us to make
capital investments when opportunities arise.
Architectural winner
“a tour de force...”
The magnificent Magdalene
College Library won gold at the
2022 Wood Awards.
Described by the judges as
“a tour de force of architectural
design and achievement”, it
featured over 120 cubic metres
of machined Florian European
Oak and 3000 linear metres of
our engineered Oak WoodEx
products, installed by our
customers Wedd Joinery
(Bookcases & Furniture) and
Piper Joinery (Windows & Doors).
JAMES LATHAM PLC ANNUAL REPORT 2022
23
Strategic Report
Financial Review
Iconic curves in London
Curved and arched ceilings are never easy to
negotiate during refurbishment projects, but when
it came to an iconic building with listed status in
London’s Barbican Centre, Francisco Sutherland
Architects knew exactly what was required. The
thermoformable, seamless, properties of HIMACS,
teamed with huge skill and attention to detail
from fabricator Deeley Fabrications MK meant the
Penthouse apartment maintained its brutalist looks,
even though the materials were far from historic.
Free Cash Flow
2022
’000’s
2021
’000’s
58,165
Operating Profit
Depreciation and other
non cash movements
902
1,407
927
Change in working capital (28,084)
Net interest paid (30) (40)
Tax paid (10,259) (3,191)
19,040
Operating cash flow
20,694
18,143
Fixed Asset additions
less disposals (4,257) (1,960)
-
Acquisitions (2,238)
Free cash flow
14,199
16,183
Interest rates have remained low throughout the year
so we have continued to use our cash to obtain cash
settlement terms with most of our major suppliers allowing
us to earn £2,656,000 of discounts received compared with
£1,772,000 last year.
Inventory Analysis
The increase in revenues has lead to an increase in
trade receivables to £63.3m (2021: £44.6m). Control of
cash flow from customers is closely monitored. Average
debtors days, taking into account our credit terms, has
reduced from 52.3 days to 49.6 days. Bad debts this year
were 0.1% against a budget of 0.4%, and a minimal charge
last year. In times of increasing pressure on business with
cost rises and supply chain difficulties, this demonstrates
the strength of our customer base. We work very closely
with our credit insurers to ensure that as many of our
major accounts as possible are covered. At the year end
we had 95.3% (2021: 94.5%) of accounts owing over
£40,000 covered by credit insurance, despite the removal
of the UK government support of credit insurance put in
place during the pandemic.
Supply Chains across the globe have struggled to recover
from the effects of the COVID-19 pandemic, which
combined with the increase in economic activity, has led
to shortages and longer lead times for imported products.
We made the decision to invest in additional inventory
levels to ensure that we could continue to consistently
supply as many of our traditional customers as possible.
2022
2021
£ 000’s
Volume m3
£ per m3
£ 000’s
Volume m3
£ per m3
Depot locations
Port locations
In Transit
Acquisitions
40,975
11,303
19,811
2,141
41,685
13,151
24,629
5,077
Total
74,230
84,542
983
859
804
422
878
29,154
7,835
11,273
-
39,451
9,381
18,683
-
48,262
67,515
739
835
603
-
715
24
JAMES LATHAM PLC ANNUAL REPORT 2022
Strategic Report
Financial Review
Stock turnover targets are set and monitored on a
monthly basis. Senior management and all staff
responsible for product areas have access to real time
stock levels and targets. Our Supply Chain Team has
worked hard this year to strengthen our supply chain and
ensure we have inventory available when required by our
customers. At 31 March 2022 stock turn based on volumes
is 5.8 times (2021: 6.2 times) compared with our target of
6.25 times. There were no significant overstocked areas
giving any concern to us at the year end.
Cash and Cash Equivalents
2022
2021
2020
2019
2018
37,030
28,618
16,950
15,541
13,989
Capital investment
We spent £0.6m completing the racking project at
Thurrock which has enabled us to create more rack spaces
for an improved stock profile. We also invested £0.4m on
the first phase of new machinery at Dresser Mouldings,
which will enable us to create more capacity for additional
production, as well as making the production process
more efficient. In addition we spent £2.6m on the cyclical
replacement of lorries and Combilift plant.
Financial risk management
In the course of our business, the group is exposed to
currency risk, interest rate risk, liquidity risk and credit risk.
The overall aim of the group’s financial risk management
strategy is to mitigate any potential negative effects on the
group’s assets and profitability. The group manages these
risks in accordance with group policies.
As the group trades predominantly in the UK and
Ireland, the market price of our products tends to
fluctuate in line with currency spot prices. Speculative
positions on currencies are not entered into. Our LDT
division can have stock tied up in kilns for six to nine
months, and we enter into currency swaps to ensure
that this stock is costed at spot price when it becomes
available for sale. We will also enter into forward currency
agreements to cover where customers are quoted a
particular exchange rate.
The cash deposits and available bank facilities reduce
our liquidity risk. Cash flow forecasts are monitored
against actual cash flows to ensure that adequate facilities
are maintained to meet the future needs of the business.
The board reviews re-forecasted profits and cash flows on
a quarterly basis.
Insurance products and external credit reference agencies
help reduce our credit risk.
The Audit Committee reviews the group’s risk register as
part of its regular monitoring process.
I am very grateful for all the work that all my Head Office
team has put in this year. They have embraced the new
hybrid way of working and have continued to provide a
first class service to our customers and suppliers and to
our depots.
Net assets at the year end were £164.0m (2021: £119.1m).
The group’s pre-tax return on capital (defined as
operating profit divided by net shareholders funds plus
non current liabilities less non current pension surplus and
deferred tax) for the year was 34.0% (2021: 14.5%).
Nick Latham
Chairman
JAMES LATHAM PLC ANNUAL REPORT 2022
25
Corporate Governance
Corporate Governance Report
I believe that good corporate governance, involving risk
appraisal and management, prudent decision making,
communication with shareholders and other stakeholders
and business efficiency, is important for the long term
benefit of the stakeholders in our group. As a board we
have considered the 10 Principles of Corporate Governance
contained within the Quoted Companies Alliance Corporate
Governance Code 2018, and show below how we have
applied these principles. I am responsible for ensuring that
the group conducts its business paying due regard to each of
the 10 principles. These principles have been communicated
to the rest of the board through training and discussion at
board meetings, and each board member is responsible for
ensuring that the message passes down to all our employees.
The 10 Principles are split into three areas, Deliver
Growth, Maintain a Dynamic Management Framework
and Build Trust. I can confirm that we have complied with
all the Principles throughout the year.
The four Principles on Delivering Growth are considered
within the Strategic Report starting on page 4.
True artisan skills
Whilst many bathrooms, kitchens and cabinets
come flat packed and ready to install, there is
still a strong market for true artisan skills. Our
customer David L Douglas is a great example
of this. Using a wide basket of materials for
a bespoke gin bar and lounge at a property in
Scotland, their craftsmen hand carved various
panels, mouldings and corbels to compliment
the walnut cabinetry around them.
26
JAMES LATHAM PLC ANNUAL REPORT 2022
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5 – Maintain the board as a well-
functioning, balanced team led by the chair.
The Board of Directors
The company is currently governed by a board of directors
consisting of myself as Chairman, three executive directors
and two non-executive directors. Each director has a vote
and no individual or small group of individuals dominates
the board’s decision making.
In the year to 31 March 2022, the board met 6 times, with
all directors attending each meeting. The board meetings
were held via a mixture of in person meetings and video
conferencing which proved just as effective as face to face
meetings. In addition conference calls are held where
matters which cannot wait for the next board meeting can
be discussed.
The non-executive directors are Fabian French and
Paula Kerrigan. I consider that all non-executives are
independent. In addition to the scheduled meetings, the
non-executives attend the group annual operational budget
and strategy meeting, as well as making individual visits to
operational sites. Each non-executive director is expected
to give a time commitment of at least 12 days a year.
Principle 6 – Ensure that between them the
directors have the necessary up-to-date experience,
skills and capabilities.
The directors’ biographies are shown on page 29.
Each executive director has many years experience within
the James Latham Group at all levels. Each director has
agreed responsibilities on the board, covering all aspects
of the business including sales, procurement, operations,
finance, HR and IT. As well as responsibilities to the plc
board, each director is actively involved in the running
of the Lathams Limited and Abbey Woods business, the
company’s trading subsidiaries, and keep their skill sets
up to date by training, discussions on market trends with
customers and suppliers and involvement with trade and
environmental organisations. I believe the board works
well together, challenging each other to constantly improve
and move forward.
Corporate Governance
Corporate Governance Report
Principle 7 – Evaluate board performance
based on clear and relevant objectives, seeking
continuous improvement.
Principle 9 – Maintain governance structures
and processes that are fit for purpose and support
good decision-making by the board.
Each director has a detailed job description showing
their responsibilities on the board. I have regular meetings
with each director to discuss the progress in the areas
they are responsible for, and consider whether any further
development or mentoring needs are necessary. Each
director is subject to the formal appraisal process used
throughout the group, and my appraisal is performed by
the non-executive directors.
The board has a formal schedule of matters referred to
it for decision, with at least one specific strategy meeting
being held each year. Agendas and board packs are
discussed and circulated in advance of the meetings to
ensure that all directors have adequate time to research
and take part in discussions on the key issues, as well as
giving the non-executive directors time to add matters of
their particular interest to the agenda.
As a board we periodically review the running of the
board, led by the non executive directors, to consider the
effectiveness of the board and whether there are any gaps
in skills on the board. This is mainly on an ad-hoc basis
where major decisions are being made to ensure that
the board has the skills to make informed judgements.
Succession planning is key so that no member of the board
becomes indispensable and has been a major focus of the
board this year.
The board is responsible for group strategy, corporate
responsibility including health and safety and environmental
issues, acquisition policy, bribery policy, approval of major
capital expenditure and monitoring the key operational and
financial risks. It also reviews the strategy and budgets for
the trading subsidiaries and monitors the progress towards
their long term objectives. All directors have access to the
company secretary or to independent professional advice,
if required, at the company’s expense.
Principle 8 – Promote a corporate culture that
is based on ethical values and behaviours.
Our core values are Integrity, Shareholder Value,
Empowerment, Sustainability and Customer Focus.
The company and the Latham brand is well respected
in its industry and amongst its customers and suppliers
for its principled trading policies and its integrity.
As such it is important for us to
have a corporate culture based on
these ethical values and behaviours.
The annual report contains reports
on corporate responsibility including
environmental, health and safety, audit
and remuneration committee reports
and reports on our attitudes to risk.
New directors receive training from the company
NOMAD on their responsibilities under the AIM rules.
Key financial information is circulated to directors on a
monthly basis outside of the board meetings.
The board has decided that the directors will retire by
rotation and the executive directors will be re-elected at
least every three years.
The Audit Committee
The members of the Audit Committee are Fabian French,
as chairman, and Paula Kerrigan. Andrew Wright and
David Dunmow also attend the meetings of the committee.
The committee meets at least three times a year to review
internal controls and the risk register within the group, and
receive reports from the external auditors and reports of
internal audit tests carried out during the year. The duties
of the audit committee include, on behalf of the board, a
review of effectiveness of the group’s financial reporting
and internal control policies, and procedures for the
identification, assessment and reporting of risk.
It also keeps under review the scope and results of the
external audit, its cost effectiveness and the independence
and objectivity of the external auditor, including
recommending their re-appointment to the board. This
includes a review of the non-audit work performed to
ensure that such work would not impair their independence
or objectivity in carrying out the audit. Once a year the
auditor meets with the non-executive directors only.
JAMES LATHAM PLC ANNUAL REPORT 2022
27
Corporate Governance
Corporate Governance Report
The group has established procedures whereby employees
of the group may, in confidence, raise concerns relating
to matters of potential fraud or other improprieties.
These procedures also cover other issues affecting
employees including health and safety issues. The audit
committee is confident that these ‘whistleblowing’
arrangements are satisfactory and will enable the
proportionate and independent investigation of such
matters and appropriate follow-up action to be taken.
Remuneration and Nominations Committee
The Remuneration and Nominations Committee, which
meets twice a year, comprises Paula Kerrigan as Chairman
and Fabian French. The meetings were attended by
Nick Latham and David Dunmow who provide information
to the Committee when required.
The main function of the Committee is to make
recommendations to the board regarding the group’s policy
on the remuneration and conditions of employment of the
executive directors of the group, and, where appropriate,
senior management, and includes considering nominations
to the board. Over the course of the year the committee
undertook a benchmarking exercise on remuneration
packages of key employees and made recommendations
to the board on an improved but more challenging bonus
scheme. The Committee also discussed group diversity
including the gender pay gap and succession planning.
The Committee has access to professional remuneration
advice from outside of the company.
The Remuneration and Nominations Committee report is
contained on page 30.
BUILD TRUST
Principle 10 – Communicate how the company
is governed and is performing by maintaining a
dialogue with shareholders and other relevant
stakeholders.
The directors have a commitment to best practice in the
group’s external financial reporting in order to present a
balanced and comprehensive assessment of the group’s
financial position and prospects to its shareholders,
employees, customers, suppliers and other third parties.
This commitment encompasses all published information
including but not limited to the year end and half yearly
accounts, regulatory news announcements and other
public information.
The published annual report contain reports of the
Remuneration and Nomination Committees.
The published information is held on our investor website
at www.lathamtimber.co.uk as well as historical financial
and meeting information.
Procedures for identifying, quantifying and managing the
risks, financial or otherwise, faced by the group have been
in place throughout the year under review. The processes
for identifying and managing the key risks to the business
are communicated regularly to all staff, who are made
aware of the areas for which they are responsible. Such
processes include strategic planning, maintenance and
review of a risk register, the appointment of appropriately
qualified staff, regular reporting and monitoring of
performance against budgets and other performance
targets, and effective control over capital expenditure.
The board has established systems of internal control
as appropriate for the size of the group. The day to day
operation of the system of internal control is under the
control of executive directors and senior management.
The system is designed to manage rather than eliminate
risk. Any system of internal control can however only
provide reasonable, but not absolute, assurance against
material misstatement and loss. No material breaches of
internal controls were reported during the year.
The directors confirm that they have reviewed the
effectiveness of the system of internal control for the year
under review and to the date of approval of the Annual
Report and Accounts through the monitoring process
described above.
Bespoke bookcase by Form Eighty.
Nick Latham, Chairman
12 July 2022
28
JAMES LATHAM PLC ANNUAL REPORT 2022
Corporate Governance
Directors and Advisors
Directors’ biographies
Nick Latham BSc Chairman
Nick Latham, age 54 has worked in the
company for 30 years and was appointed to
the board in 2007. He provides advice to the
Remuneration Committee. He is a board director
of Timber Development UK (TDUK) and a
former director of the Timber Research and
Development Association.
David Dunmow BSc FCA
Finance Director and Company Secretary
David Dunmow, age 58, has worked in the
company for 28 years and was appointed to
the board as Finance Director in 2000. He is a
Fellow of the Institute of Chartered Accountants
in England and Wales. He is a director of Abbey
Wood Agencies Limited, and provides advice
to the Audit and Remuneration Committees.
He is a former treasurer of the Timber Trade
Federation. He is a Trustee of the James Latham
plc Pension and Assurance Scheme.
Andrew Wright Managing Director
Andrew Wright, age 57, has worked in the
company for 21 years and was appointed to the
board in 2015. He is Managing Director, chairing
the Lathams Limited board, and provides advice
to the Audit Committee.
Piers Latham BSc Executive Director
Piers Latham, age 51 has worked in the company
for 29 years and was appointed to the board in
2014. He is a director of Lathams Limited, and
Chairman of the Trustees of the James Latham plc
Pension and Assurance Scheme.
Fabian French MA Non-Executive Director
Fabian French, age 63, was appointed a non-
executive director in 2015. He chairs the Audit
Committee and sits on the Remuneration and
Nominations committee. He is a qualified
solicitor and worked in corporate finance for
major investment banks. He is a director of
CCRTM Ltd, St. George’s School Windsor and
Trebartha Hydro Ltd, and is a previous director
of Mithras Investment Trust plc.
Paula Kerrigan Non-Executive Director
Paula Kerrigan, age 50, was appointed a non-
executive director in 2017. She has a wide variety
of public company experience and is currently
Chief Strategy and Innovation Officer at Saga plc.
She sits on the Audit Committee and the
Remuneration and Nominations Committee.
She has previously held C-suite strategy and
transformation roles at Greene King,
SuperGroup plc and the Co-operative Group.
Prior to that she spent 15 years at Kingfisher
plc where she held a variety of roles including
Finance and Strategy Director for B&Q in Asia
and Delivering Value Director for B&Q in the UK.
Registrars
Computershare Investor
Services plc
The Pavilions
Bridgwater Road
Bristol BS13 8FB
Bankers
Royal Bank of Scotland
Major Corporate Banking
280 Bishopsgate
London EC2M 4RB
Clydesdale Bank Corporate
and Structured Finance
15th Floor
The Leadenhall Building
122 Leadenhall Street
London EC3V 4AB
Stockbrokers and
Nominated Adviser
SP Angel Corporate
Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Pensions Advisors
First Actuarial LLP
Network House
Basing View
Basingstoke
Hampshire RG21 4HG
Independent Auditor
RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
Registered Office
James Latham plc
Unit 3
Swallow Park
Finway Road
Hemel Hempstead
Herts HP2 7QU
Registered Number 65619
Registered in England
and Wales
Nick Latham
David Dunmow
Andrew Wright
Piers Latham
Fabian French
Paula Kerrigan
JAMES LATHAM PLC ANNUAL REPORT 2022
29
Pension Scheme
The executive directors are members of the
James Latham plc Pension and Assurance Scheme which
is a final salary scheme. The directors are required to
contribute 8% of pensionable salary. In 2003 the definition
of pensionable salary was amended to exclude bonuses,
and increases in pensionable salary would be restricted to
a maximum of Consumer Price Inflation plus 1%.
Service Contracts
Following a review by the board of directors in 1996,
the service contracts of executive directors were amended
to incorporate a rolling 2 year notice period. This was
considered by the board of directors to be a significant
but reasonable reduction in their original 5 year contracts.
In 2004, the directors agreed that any service contracts
issued to new directors would be subject to a minimum
6 month notice period.
Executive director’s contracts have no provisions for
pre-determined compensation on termination that
exceeds two years salary and benefits in kind.
Remuneration of the non-executive directors
The remuneration of the non-executive directors is
determined by the board. The non-executive directors do
not receive a pension or other benefits from the group.
Corporate Governance
Directors’ Remuneration Report
This report has been compiled by the company’s
Remuneration and Nominations Committee and sets out
the company’s remuneration policies for its key directors.
Remuneration Policy
The remuneration policy aims to ensure that executive
directors are fairly rewarded for their individual
contributions to the performance of the group, with due
regard for the interests of shareholders in achieving long
term growth for the company.
The remuneration package consists of basic salary,
benefits (comprising car and private medical provision),
pensions, annual bonus schemes, share option schemes
and life assurance cover of 4 times gross salary.
Pay rises for group employees are considered once a year,
to apply from 1 December. The Remuneration Committee
sets an overall maximum percentage pay rise, based on
cost of living increases plus awards for promotion where
relevant. The executive directors have their pay rises based
on the same criteria as all other employees.
Performance related bonuses
Annual bonuses can be earned by executive directors for
the achievement of specific financial performance targets
set by the group’s board of directors and agreed by the
remuneration committee. The criterion on which the
executive directors’ bonuses were based in 2022 was the
achievement of £17,319,000 operating profit, as measured
in the depots management accounts, an increase of 12.3%
over the previous year’s targets. Maximum bonuses of
39.5% of basic salary are paid on achieving 130% of the
target operating profit. The minimum bonus level is 1.3%
paid on achieving 90% of target operating profit, below
which nothing is earned. This year 363.1% of the target
operating profit was achieved earning 39.5% of basic
salary. In addition a Group Bonus scheme pays out a
bonus to all eligible members of staff, subject to achieving
a minimum level of group profits. This year the scheme is
paying 11.78% of basic salary to 514 eligible employees.
None of the bonus schemes applicable to directors are
affected by share price appreciation or depreciation.
The directors participate in the company share option
schemes, and details of any gains made on options
exercised during the year are shown on page 33.
30
JAMES LATHAM PLC ANNUAL REPORT 2022
Corporate Governance
Directors’ Remuneration Report
Review of past performance
The graph below shows the company’s total shareholder return performance against the total shareholder return
performance of the AIM All Share Index for the five years ended 31 March 2022.
James Latham plc total shareholder return
80
60
40
20
0
-20
2017
2018
2019
2020
2021
2022
Directors’ emoluments
Details of the individual directors’ emoluments for the year were as follows:
James Latham Plc
FTSE AIM All
Share Index
The Remuneration
Committee consider this
to be the most appropriate
graph against which to
compare the company’s
performance.
Salary
and fees
Benefits
Bonus
Total
emoluments
excluding
pensions
Share
based
payments
Pension
contributions
£000
£000
£000
£000
£000
£000
Executive
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
Non-executive
P.L.F. French
P. Kerrigan
Total
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
225
207
198
189
190
170
195
181
37
34
37
34
882
815
1
1
9
15
1
10
7
18
-
-
-
-
18
44
115
53
104
48
96
44
104
48
-
-
-
-
341
261
311
252
287
224
306
247
37
34
37
34
419
193
1,319
1,052
3
3
3
3
3
3
12
2
-
-
-
-
21
11
TOTAL
£000
398
299
387
302
334
257
368
283
37
34
37
34
54
35
73
47
44
30
50
34
-
-
-
-
221
146
1,561
1,209
JAMES LATHAM PLC ANNUAL REPORT 2022
31
Corporate Governance
Directors’ Remuneration Report
Directors’ shareholdings
There were no contracts with the company or its subsidiaries during the year in which any of the directors had a
material interest, other than their service contracts. The directors’ holdings of the share capital at the end of the financial
year were as follows:
Directors
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
P.L.F. French
P. Kerrigan
31 March 2022
31 March 2021
Ordinary shares
Preference shares
Ordinary shares
Preference shares
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
641,614
139,703
638,628
29,657
370,052
-
-
-
567
-
-
-
639,996
138,153
637,002
28,198
370,052
-
-
-
567
-
-
-
Directors’ share option schemes
Save as You Earn Scheme
Participation by the directors in the James Latham plc Save as You Earn Scheme is as follows:
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
31 March 2022
31 March 2021
2,475
2,475
2,475
1,237
2,475
2,475
2,475
1,237
Options were granted on 2 January 2020 at 727p per share, and the options are exercisable on 1 March 2023.
32
JAMES LATHAM PLC ANNUAL REPORT 2022
Corporate Governance
Directors’ Remuneration Report
Company Share Option Scheme
Participation by the directors in the James Latham plc Approved Company Share Option Scheme 2008 is as follows:
Outstanding
1 April 2021
Granted during
the year
Exercised
Outstanding
31 March 2022
Exercise
price
N.C. Latham
D.A. Dunmow
P.F. Latham
A.G. Wright
636
560
718
466
486
-
636
560
718
466
486
-
636
560
718
466
486
-
586
636
560
718
466
486
-
-
-
-
-
-
357
-
-
-
-
-
357
-
-
-
-
-
357
-
-
-
-
-
-
357
(636)
-
-
-
-
-
(636)
-
-
-
-
-
(636)
-
-
-
-
-
(586)
(636)
-
-
-
-
-
-
560
718
466
486
357
-
560
718
466
486
357
-
560
718
466
486
357
-
-
560
718
466
486
357
£7.075
£8.025
£6.26
£9.65
£9.25
£12.60
£7.075
£8.025
£6.26
£9.65
£9.25
£12.60
£7.075
£8.025
£6.26
£9.65
£9.25
£12.60
£5.65
£7.075
£8.025
£6.26
£9.65
£9.25
£12.60
Exercise period
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
16.12.25 to 15.12.30
11.12.26 to 10.12.31
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
16.12.25 to 15.12.30
11.12.26 to 10.12.31
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
16.12.25 to 15.12.30
11.12.26 to 10.12.31
05.01.20 to 04.01.25
06.12.21 to 05.12.26
14.12.22 to 13.12.27
03.01.24 to 02.01.29
23.12.24 to 22.12.29
16.12.25 to 15.12.30
11.12.26 to 10.12.31
These options will only be exercised if the share price during the exercise period is in excess of the exercise price.
Mr N.C. Latham, Mr D.A. Dunmow and Mr P.F. Latham made a gain of £3,361 and Mr A.G. Wright made a gain of £6,605 on
options exercised during the year.
Deferred Share Bonus Plan
Participation by the directors in the James Latham plc Deferred Share Bonus Plan is as follows:
Outstanding
1 April 2021
Awarded
during the year
Exercised
Outstanding
31 March 2022
Exercise
price
Award
price
Vesting
Date
A.G. Wright
-
3,254
-
3,254
nil
£9.15
01.04.2024
No performance conditions or voting rights apply to these shares, but dividends will be reinvested into additional shares
in the plan.
Paula Kerrigan,
Chairman of the Remuneration Committee
12 July 2022
JAMES LATHAM PLC ANNUAL REPORT 2022
33
Corporate Governance
Directors’ Report
The directors have pleasure in presenting their annual
report and the audited accounts for the year ended
31 March 2022. In accordance with section 414c(11) of
the Companies Act 2006, included in the Strategic
Review is the review of financial risk management, future
developments, carbon emission disclosures, employee
policies and engagement policies with suppliers, customers
and other stakeholders. This information would have
been required by section 7 of the Large and Medium
sized Companies and Groups (Accounts and Reports)
Regulations 2008 to be contained in the Directors Report.
Results and dividends
Group results for the year ended 31 March 2022 are
set out on page 44. The directors recommend the
following dividends:-
Ordinary dividends
Interim dividend paid, 6.5 pence
(2021: 5.7 pence) per ordinary share
Final dividend proposed, 27.0 pence
(2021: 15.5 pence) per ordinary share
Total ordinary dividends, 33.5 pence
(2021: 21.2 pence) per ordinary share
£000
1,295
5,379
6,674
The directors recommend payment of the final dividend
on 2nd September 2022 to shareholders on the register of
members at the close of business on 5th August 2022.
Balance sheet and post balance sheet events
The balance sheet on page 46 shows the group’s financial
position. No significant events have occurred since the
balance sheet date.
Staircase in Sapele by Orange Tree Joinery.
34
JAMES LATHAM PLC ANNUAL REPORT 2022
Directors
All directors of the company were directors throughout
the year. Each director’s biographical details are shown
on page 29.
In compliance with the Articles of Association, Fabian
French, Paula Kerrigan and Nick Latham will retire by
rotation and, being eligible, offer themselves for re-election.
Other than their service contracts, no director has a
material interest in any contract with the company.
Fabian French and Paula Kerrigan, as non-executive
directors, do not have a service contract with the
company, but each has received a letter of appointment
for a two year period. Details of directors’ emoluments,
pension rights, service contracts and the directors’
interests in the ordinary shares of the company are
included in the Directors’ Remuneration Report on
pages 30 to 33.
Article 168 of the company’s Articles of Association gives
the directors and officers of the company a right to be
indemnified out of the assets of the company in respect
of any liability incurred in relation to the affairs of the
group to the extent the law allows.
The company has undertaken to comply with best
practice on approval of directors’ conflicts of interest.
Under the Companies Act 2006 a director must avoid
a situation where there is, or can be, an interest that
may conflict with the company’s interests. None of the
directors had an interest in any contract to which the
group was a party during the year.
The company maintained directors’ and officers’ liability
insurance cover throughout the year.
Share capital
Details of the share capital is shown in Note 22.
Resolutions concerning the ability of the board to
purchase the company’s own shares and to allot shares
and to dis-apply pre-emption rights are again being
proposed at the Annual General Meeting.
The investment in own shares is detailed in note 24 on
page 75. The company holds 209,200 ordinary shares
as treasury shares, with a view to being used for future
employee share schemes. The company also holds 208
preference shares in treasury. In addition the Trustees
of the James Latham Employee Benefits Trust holds
32,197 shares with a view to being used for employee
share schemes.
Corporate Governance
Directors’ Report
Gin bar in Black Walnut by David L Douglas.
Share option schemes
On 23 August 2017, the shareholders approved by ordinary
resolution the extension of the Save as You Earn scheme
for a further 10 years. A 3 year scheme commenced on
1 February 2020 with 193,215 options being issued at an
option price of £7.27.
On 21 August 2008, the shareholders approved by special
resolution the establishment of the Company Share
Option Scheme. During the year 13,080 options were
issued at an option price of £12.60. In addition 16,538
options were exercised after being held for five years,
550 at an option price of £2.725, 530 at an option price of
£5.65, 3,632 at an option price of £6.825 and 11,826 at an
option price of £7.075.
In addition 3,254 shares were awarded under the Deferred
Bonus Scheme 2010 at nil price to be exercised after 3 years.
Employees
The strategic report on pages 4 and 14 sets out the
group’s communication policies with our employees and
our policy towards disability. This report shows how the
directors engage with the group’s employees, have regard
to their interests and encourage them to contribute to the
development of the group’s trading and other policies.
Substantial shareholdings
At 29 June 2022, the company had received notification
under the Disclosure Transparency Rules that the holdings
and voting rights exceeding the 3% notification threshold
were as follows:
Peter Latham
Close Asset Management Ltd
Robert Latham
Nick Latham
Piers Latham
Number
1,216,289
1,015,112
684,121
641,614
638,628
%
6.10
5.09
3.43
3.22
3.20
Suppliers
The group recognises the important part our suppliers
play in our trading success, including the development
of new products, new markets and meeting our
environmental targets. Regular meetings are held at the
highest level with our key suppliers to ensure our trading
and environmental requirements are understood and
forming strategic partnerships to develop the markets.
Operating businesses are responsible for agreeing the
terms and conditions under which business transactions
with their suppliers are conducted. The group’s policy
is to pay suppliers in accordance with these terms.
The group’s creditor days at 31 March 2022 were 34 days
(2021: 35 days). Payment practices and performance data
for Lathams Limited is published https://check-payment-
practices.service.gov.uk/company/00967247/reports.
JAMES LATHAM PLC ANNUAL REPORT 2022
35
Corporate Governance
Directors’ Report
Going concern
After making appropriate enquiries, the directors have a
reasonable expectation that the company and the group
have adequate resources to continue in operational
existence for the foreseeable future. The directors
confirm that the business is a going concern and that
their assessment of the going concern position has been
prepared in accordance with the Guidance on the Going
Concern Basis of Accounting and Reporting On Solvency
and Liquidity Risks published by the Financial Reporting
Council in April 2016.
Auditor
A resolution to reappoint RSM UK Audit LLP as the
company’s auditor and to authorise the directors to fix
their remuneration will be proposed at the Annual
General Meeting. RSM UK Audit LLP has indicated its
willingness to continue in office.
Annual General Meeting
Shareholders receive more than 20 working days notice
of the Annual General Meeting, where directors will be
available for questions and a trading update provided.
In arriving at their opinion, the directors considered:-
• The group’s cash flow forecasts and revenue projections
for the period to 31 July 2023
• Sensitivity of these projections to reasonable changes in
trading conditions
• Cash and borrowing facilities available to the group
• Consideration of the principal risks and uncertainties
outlined on pages 15 to 17.
Political and charitable donations
During the year the group made no political contributions
but made direct donations to various charitable
organisations amounting to £22,934 (2021: £16,369).
The group also made small donations of our products to
a number of good causes and was involved in fund raising
activities for the Timber Trades Benevolent Society.
Financial instruments
A summary of the group financial instruments and related
disclosures are set out in note 28 to the group accounts
and in the Financial Review on pages 22 to 25.
Provision of information to the auditor
In the case of each of the directors who are directors of
the company at the date when this report was approved:
• So far as each of the directors is aware, there is no
relevant audit information of which the company’s
auditor is unaware; and
• Each of the directors has taken all the steps that he
ought to have taken as a director to make himself or
herself aware of any relevant audit information and to
establish that the company’s auditor is aware of that
information.
The Annual General Meeting will be held at Unit 1,
Swallow Park, Finway Road, Hemel Hempstead, Herts,
HP2 7QU on 31 August 2022 at 12.30pm. An announcement
will be made to the Stock Exchange should guidance
change which places restrictions over the holding of
the AGM. Last year all resolutions were passed with over
90% of the votes in favour.
This year the following items are to be proposed as special
business, and the board recommends that the shareholders
vote in favour of all resolutions put before the meeting.
Resolution 7. Directors authority to allot shares.
This gives the board the power to allot ordinary shares or
other securities, up to an aggregate nominal amount of
£1,680,000 (or one third of the current ordinary shares).
Resolution 8. Dis-application of pre-emption rights.
The Companies Act 2006 provides that when ordinary
shares are being issued for cash, these shares must
first be offered to existing shareholders on a pro rata
basis. This resolution empowers the board to allot shares
not exceeding 5% of the issued share capital, without
offering to existing shareholders. The board only
anticipates using this power in conjunction with the
employee share schemes.
Resolution 9. Authority for the company to purchase
its own shares. This gives the board the power to purchase
up to 10% of the company’s shares at a price not more
than 105% of the average of the mid market price for the
ten business days preceding the date of the purchase.
On behalf of the Board of Directors
Nick Latham
Chairman
12 July 2022
36
JAMES LATHAM PLC ANNUAL REPORT 2022
Corporate Governance
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic
Report, the Directors’ Report and the financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare group
and company financial statements for each financial year.
The directors have elected under company law and are
required by the AIM Rules of the London Stock Exchange
to prepare the group financial statements in accordance
with UK-adopted International Accounting Standards and
have elected under company law to prepare the company
financial statements in accordance with UK-adopted
International Accounting Standards and applicable law.
The group and company financial statements are
required by law and UK-adopted International Accounting
Standards to present fairly the financial position of the
group and the company and the financial performance of
the group and the company. The Companies Act 2006
provides in relation to such financial statements that
references in the relevant part of that Act to financial
statements giving a true and fair view are references to
their achieving a fair presentation.
Under company law the directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the group
and the company and of the profit or loss of the group for
that period.
In preparing each of the group and company financial
statements, the directors are required to:
a. select suitable accounting policies and then apply
them consistently;
b. make judgements and accounting estimates that are
reasonable and prudent;
c. state whether they have been prepared in accordance
with UK-adopted International Accounting Standards;
d. prepare the financial statements on the going
High-Bay racking for larger stock profile.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the group’s and the company’s transactions and
disclose with reasonable accuracy at any time the financial
position of the group and the company and enable them
to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the group and
the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the James Latham plc Investors website,
www.lathamtimber.co.uk.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
concern basis unless it is inappropriate to presume
that the group and the company will continue in
business.
On behalf of the Board of Directors
Nick Latham
Chairman
12 July 2022
JAMES LATHAM PLC ANNUAL REPORT 2022
37
Corporate Governance
Independent Auditor’s Report
Opinion
We have audited the financial statements of James
Latham plc (the ‘parent company’) and its subsidiaries
(together, the ‘group’) for the year ended 31 March 2022
which comprise the consolidated income statement,
consolidated statement of comprehensive income,
consolidated and company balance sheets, consolidated
and company statements of changes in equity,
consolidated and company cash flow statements and
notes to the financial statements, including significant
accounting policies. The financial reporting framework
that has been applied in their preparation is applicable
law and UK-adopted International Accounting Standards
and, as regards the parent company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 31 March 2022 and of the group’s profit for the
year then ended;
• the group financial statements have been properly
prepared in accordance with UK-adopted International
Accounting Standards;
• the parent company financial statements have been
properly prepared in accordance with UK-adopted
International Accounting Standards and as applied in
accordance with the Companies Act 2006; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We are independent of the group
and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard
as applied to listed entities and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis
for our opinion.
38
JAMES LATHAM PLC ANNUAL REPORT 2022
Summary of our audit approach
Key audit matters
Group
• Inventory – valuation
• Defined benefit pension
obligation – recoverability of
surplus recognised
Materiality
Group
• Overall materiality: £2,720,000
(2021: £930,000)
• Performance materiality:
£2,040,000 (2021: £698,000)
Parent Company
• Overall materiality: £93,900
(2021: £401,000)
• Performance materiality:
£70,400 (2021: £301,000)
Scope
Our audit procedures covered 95%
of revenue, 97% of total assets
and 97% of profit before tax.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the group and parent company financial
statements of the current period and include the most
significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including
those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of
the group and parent company financial statements as a
whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
We have determined the matters described below to be
the key audit matters to be communicated in our report.
Corporate Governance
Independent Auditor’s Report
Inventory – valuation
Key audit matter
description
As set out in note 16 to the financial statements, the group carried inventory amounting to £74.2m
at 31 March 2022 (2021: £48.3m) and details of the accounting policies applicable during the year are
set out in notes 1.10 and 1.20. Provisioning is the element of the inventory balance which involves the
highest degree of management judgement in arriving at the year end inventory valuation and it is this
aspect of the year end inventory valuation that we have designated as a key audit matter.
How the matter
was addressed
in the audit
To audit the appropriateness of the provision against inventory, we:
• considered management’s stock provisioning policy in the light of the requirements of IAS 2 Inventories
and in the context of the significant change in the market for the group’s products in the year.
• reviewed and compared the aged profile of inventory and the provision at 31 March 2022 on a group
and individual depot basis. We investigated any significant increase or decrease in the provision
compared to 31 March 2021 and assessed the provision as a percentage of total inventory year on
year to identify any significant changes.
• obtained the detailed loss-making sales report for the period post year end and calculated the
total loss on sales post year end compared to the cost of inventory at 31 March 2022. We compared
this to the inventory provision at the year end to assess whether the provision has been materially
under or over-stated.
• performed reliability testing on the underlying stock ageing data by testing a sample of sales orders and
stock receipt to supporting documentation to ensure that the transactions were recorded accurately.
Defined benefit pension – recoverability of surplus recognised
Key audit matter
description
As set out in note 20.2 to the financial statements, the group recognised at 31 March 2022 a
defined benefit pension surplus of £1.12m (2021: deficit (as restated) of £5.93m) under IAS 19
Employee benefits after an adjustment under IFRIC 14 The limit on a defined benefit asset, minimum
funding requirements and their interaction of £5.87m (2021 (as restated): £3.37m).
How the matter
was addressed
in the audit
Under IFRIC 14, the group is required to consider the recoverability of any recognised surplus, taking
into account any minimum funding requirement in place at the balance sheet date. Following a review
by management of the position at 31 March 2021, the reported deficit at that date was restated in the
consolidated balance sheet.
This area is considered to be a key audit matter as it absorbed significant time and resource at the
audit, as well as involving a prior year adjustment.
During the audit we assessed management’s consideration of the recoverability of the recognised
surplus and/or committed minimum funding requirement commitment by:
• obtaining evidence of the nature of the minimum funding arrangement (deficit reduction plan) in
place at 31 March 2022 and 31 March 2021 and assessing management’s judgement regarding
potential additional dividend-linked contributions as avoidable obligations.
• obtaining evidence of the group’s ability to recover a surplus either through reduced future
contributions or via refunds of contributions.
• reviewing management’s assessment of any amounts which could be recovered via reductions in
future scheme contributions.
• reviewing management’s assessment of amounts which would be withheld were a surplus to be
refunded.
• considering management’s assessment of the deferred tax impact of the above.
• assessing the adequacy and appropriateness of financial statement disclosures regarding the
recovery of the defined benefit pension scheme surplus and impact of the minimum funding
arrangement, including the assumptions and judgements disclosed (note 1.20) and restatement of
the prior year deficit and related deferred tax.
JAMES LATHAM PLC ANNUAL REPORT 2022
39
Corporate Governance
Independent Auditor’s Report
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and
extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial
statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative
nature and the size of the misstatements. Based on our professional judgement, we determined materiality as follows:
Group
Parent company
Overall materiality
£2,720,000 (2021: £930,000)
£93,900 (2021: £401,000)
Basis for determining
overall materiality
4.7% (2021: 5%) of profit before tax
0.9% (2021: 3.9%) of net assets
Rationale for
benchmark applied
Profit measure used for the trading
activities of the Group.
Asset based measure used for the parent
company as it holds the investment in
subsidiaries and has no trading activities.
Performance materiality
£2,040,000 (2021: £698,000)
£70,400 (2021: £301,000)
Basis for determining
performance materiality
Reporting of
misstatements to the
Audit Committee
75% of overall materiality
75% of overall materiality
Misstatements in excess of £136,000
(2021: £46,000) and misstatements below
that threshold that, in our view, warranted
reporting on qualitative grounds.
Misstatements in excess of £4,700
(2021: £20,000) and misstatements below
that threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
The group consists of four components, which are based in the United Kingdom and the Republic of Ireland.
Full scope audits were performed for two components; analytical procedures were performed at group level for the
remainder of the group.
Number of components
Revenue
Total assets
Profit before tax
Full scope audit
Analytical procedures
at group level
Total
2
2
4
95%
5%
97%
3%
97%
3%
100%
100%
100%
40
JAMES LATHAM PLC ANNUAL REPORT 2022
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the directors’ assessment
of the group’s and parent company’s ability to continue
to operate as a going concern included reviewing and
evaluating managements cash flow forecast for the
twelve months from anticipated approval of the financial
statements and the results of sensitivity analysis as well as
considering post year end results and cash positions.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s or the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Other information
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information contained within
the annual report. Our opinion on the financial statements
does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information
and, in doing so, consider whether the other information
is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit
or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Corporate Governance
Independent Auditor’s Report
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control
as the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless
the directors either intend to liquidate the group or
the parent company or to cease operations, or have no
realistic alternative but to do so.
JAMES LATHAM PLC ANNUAL REPORT 2022
41
Corporate Governance
Independent Auditor’s Report
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
The extent to which the audit was considered
capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with
laws and regulations. The objectives of our audit are
to obtain sufficient appropriate audit evidence
regarding compliance with laws and regulations that
have a direct effect on the determination of material
amounts and disclosures in the financial statements, to
perform audit procedures to help identify instances of
non-compliance with other laws and regulations that
may have a material effect on the financial statements,
and to respond appropriately to identified or suspected
non-compliance with laws and regulations identified
during the audit.
the financial statements due to fraud, to obtain sufficient
appropriate audit evidence regarding the assessed
risks of material misstatement due to fraud through
designing and implementing appropriate responses and
to respond appropriately to fraud or suspected fraud
identified during the audit.
However, it is the primary responsibility of management,
with the oversight of those charged with governance,
to ensure that the entity’s operations are conducted in
accordance with the provisions of laws and regulations
and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement
in respect of irregularities, including fraud, the group audit
engagement team:
• obtained an understanding of the nature of the industry
and sector, including the legal and regulatory framework
that the group and parent company operate in and how
the group and parent company are complying with the
legal and regulatory framework;
• inquired of management, and those charged with
governance, about their own identification and
assessment of the risks of irregularities, including any
known actual, suspected or alleged instances of fraud;
• discussed matters about non-compliance with laws
and regulations and how fraud might occur including
assessment of how and where the financial statements
may be susceptible to fraud.
In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement of
The most significant laws and regulations were determined
as follows:
Legislation / Regulation
UK-adopted International
Accounting Standards and
Companies Act 2006
Additional audit procedures performed by the Group audit
engagement team included:
• Review of financial statement disclosures and testing to supporting
documentation.
• Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance regulations
• Inspection of any advice received from external tax advisers.
• Inspection of any correspondence with local tax authorities.
• Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
UK timber regulations
• Inquiry of management.
• Inspection of board minutes and any legal and regulatory correspondence.
42
JAMES LATHAM PLC ANNUAL REPORT 2022
Corporate Governance
Independent Auditor’s Report
The areas that we identified as being susceptible to material misstatement due to fraud was:
Risk
Audit procedures performed by the audit engagement team:
Revenue recognition: cut-off
• Testing a sample of goods dispatched records either side of 31 March 2022,
inspecting supporting documentation and determining the appropriate
accounting period in which each transaction in the sample should be recorded.
• Testing a sample of sales issued not yet invoiced as at 31 March 2022 to
supporting sales order and goods dispatched records.
• Testing a sample of credit notes raised in the month following the year
end and determining whether they are indicative of an error or potential
misstatement relating to revenue recorded in the year to 31 March 2022.
• Investigating any discrepancies where revenue does not appear to have been
recognised in the correct period according to the supporting documentation.
Management override of controls
• Testing the appropriateness of journal entries and other adjustments;
• Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias;
• Auditing the appropriateness of management’s provisioning against inventory
at 31 March 2022; and
• Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the
audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to them
in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company
and the company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
William Farren FCA
(Senior Statutory Auditor)
For and on behalf of
RSM UK Audit LLP
Statutory Auditor, Chartered Accountants
25 Farringdon Street, London, EC4A 4AB
12 July 2022
JAMES LATHAM PLC ANNUAL REPORT 2022
43
Financial Statements
Consolidated Income Statement
For the year ended 31 March 2022
£’000s
Notes
2022
2021
Continuing Operations
Revenue
250,162
Cost of sales (including warehouse costs) 3 (293,839) (205,060)
385,368
2
45,102
Gross profit
Selling and distribution costs 3 (22,151) (17,464)
Administrative expenses 3 (11,213) (8,598)
91,529
Operating profit
Finance income
Finance costs
Profit before tax
Tax expense
58,165
29
19,040
5
11
6 (242) (453)
3
18,598
7 (12,310) (3,616)
57,952
Profit after tax attributable to owners
of the parent company
Earnings per ordinary share (basic)
Earnings per ordinary share (diluted)
9
9
45,642
229.3p
228.3p
14,982
75.4p
75.2p
44
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
£’000s
Notes
2022
Restated
2021
14,982
45,642
20.2 3,625
3,345
(424)
(29)
(636)
(58)
Profit after tax
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme
Deferred tax relating to components of
other comprehensive income
Foreign translation charge
Other comprehensive income for the year,
net of tax
Total comprehensive income attributable to
the owners of the parent company
The comparative financial information has been restated (see note 20).
3,172
2,651
48,814
17,633
JAMES LATHAM PLC ANNUAL REPORT 2022
45
Financial Statements
Consolidated and Company Balance Sheet
As at 31 March 2022
£’000s
Assets
Non-current assets
Investments
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use-assets
Retirement benefit surplus
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Lease liabilities
Trade and other payables
Interest bearing loans and borrowings
Tax payable
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Lease liabilities
Retirement and other benefit obligation
Other payables
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Issued capital
Share-based payment reserve
Own shares
Capital reserve
Retained earnings
Company Registration Number 65619
Group
Company
Notes
2022
Restated
2021
2022
2021
-
872
1,655
35,342
4,064
-
1,174
43,107
9,613
-
-
9,613
-
-
48 18
1,485 791
-
129 23
-
11,275
10,445
-
1,372
1,487
36,935
4,154
1,119
154
45,221
74,230
68,332
37,030
10
11
12
13
14
20
15
16
17
14
18
19
19
14
20
21
15
48,262
-
48,003 3,328
204
28,618
-
3,992
168
4,160
179,592
124,883
3,532
224,813
167,990
14,807
14,605
1,275
50,876
-
400
52,551
1,123
34,761
-
-
35,884
82
1,795
936
-
2,813
10
1,193
1,807
-
3,010
592
3,133
-
-
4,566
592
3,137
5,933
21
3,339
592
1,430
-
-
-
592
799
-
-
-
1,391
4,401
60,842
48,906
4,835
163,971
119,084
9,972
10,204
5,040
167
5,040
387
5,040
22
23
387 167
24 (873) (471) (873) (471)
395
5,073
398
159,019
398
113,950
395
5,023
5,040
Total non-current liabilities
8,291
13,022
2,022
Total equity attributable to
shareholders of the parent company
163,971
119,084
9,972
10,204
The comparative financial information has been restated (see note 20).
The Company’s profit for the year was £3,695,000 (2021: £1,052,000).
These accounts were approved and authorised for issue by the Board of Directors on 12 July 2022 and signed on its behalf by:
N.C. Latham and P.F. Latham (Directors)
The consolidated and company notes on pages 50 to 80 form part of these accounts.
46
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Consolidated Statement of Changes in Equity
Attributable to owners of the parent company
Issued
capital
£’000
5,040
-
Share-based
payment
reserve
£’000
Own
shares
£’000
25 (619)
-
-
Capital
reserve
£’000
398
-
Restated
retained
earnings
£’000
Total
equity
£’000
99,433
14,982
104,277
14,982
-
-
-
-
-
-
-
-
- -
3,345
3,345
-
-
-
- (636) (636)
- (58) (58)
-
17,633
17,633
-
-
-
- (20) 148
-
-
-
-
6
156
- (3,121) (3,121)
5 133
-
6
-
156
-
-
-
Balance at 1 April 2020
Profit for the year
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme (restated *)
Deferred tax relating to components
of other comprehensive income
(restated *)
Foreign translation charge
Total comprehensive income for
the year
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Share-based payment expense
Total transactions with owners
-
142
148
- (3,116) (2,826)
Balance at 31 March 2021
5,040
167 (471)
398
113,950
119,084
Profit for the year
Other comprehensive income:
Actuarial gain on defined benefit
pension scheme
Deferred tax relating to components
of other comprehensive income
Foreign translation charge
Total comprehensive income for
the year
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Transfer of treasury shares
Share-based payment expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- (24) 228
- 75
-
- (630)
-
-
-
169
-
-
45,642
45,642
3,625
3,625
- (424) (424)
- (29) (29)
-
48,814
48,814
4
- (4,379) (4,379)
-
208
- 75
-
-
- 630
169
-
-
Total transactions with owners
- 220 (402)
- (3,745) (3,927)
Balance at 31 March 2022
5,040
387 (873)
398
159,019
163,971
* See note 20.2 for details regarding the restatement as a result of an error.
JAMES LATHAM PLC ANNUAL REPORT 2022
47
Financial Statements
Company Statement of Changes in Equity
Attributable to owners of the parent company
Share-based
payment
reserve
£’000
Own
shares
£’000
Capital
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
25 (619)
395
7,137
11,978
-
-
-
-
- 1,052 1,052
-
1,052
1,052
Issued
capital
£’000
5,040
-
-
-
-
-
- (20) 148
-
-
-
-
6
156
- (3,121) (3,121)
5 133
-
6
-
-
156
-
-
Balance at 1 April 2020
Profit for the year
Total comprehensive income
for the year
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Share-based payment expense
Total transactions with owners
- 142 148
- (3,116) (2,826)
Balance at 31 March 2021
5,040
167 (471)
395 5,073
10,204
Profit for the year
Total comprehensive income for the year
-
-
-
-
-
-
-
-
3,695
3,695
3,695
3,695
Transactions with owners:
Dividends
Exercise of options
Deferred tax on share options
Share-based payment expense
-
-
-
- (24) (402)
-
- 75
-
169
-
- (4,379) (4,379)
- 634
208
- 75
-
169
-
-
Total transactions with owners
-
220 (402)
- (3,745) (3,927)
Balance at 31 March 2022
5,040
387 (873)
395
5,023
9,972
The share-based payment reserve represents the movements associated with current employee share option schemes.
The own shares reserve represents the cost of shares purchased in the market and held by the James Latham plc
Employee Benefits Trust to satisfy options under the Group’s share option schemes.
The capital reserve represents the cancellation of the preference shares.
48
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Consolidated and Company Cash Flow Statement
For the year ended 31 March 2022
Group
Company
£’000s
Notes
2022
2021
2022
2021
Net cash flow from operating activities
Cash generated from operations
Interest paid
Income tax paid
25
30,983
21,374 (1,786) (3,238)
(59) (51) (48) (48)
- (3)
(10,259) (3,191)
Net cash inflow/(outflow) from operating activities
20,665
18,132 (1,834) (3,289)
Cash flows from investing activities
Interest received and similar income
Dividend received
Acquisition of businesses net of cash and
cash equivalents acquired
Purchase of property, plant and equipment
Proceeds from sale of property, plant
and equipment
29
-
11
-
1
7,209
5
3,850
(2,238)
-
(4,319) (1,968) (33)
-
62
8
-
-
-
-
Net cash (outflow)/inflow from investing activities
(6,466) (1,949)
7,177
3,855
Cash flows from financing activities
Lease liability payments (1,408) (1,394) (57) (13)
Equity dividends paid (4,379) (3,121) (4,379) (3,134)
Net cash outflow from financing activities
(5,787) (4,515) (4,436) (3,134)
Increase/(decrease) in cash and cash
equivalents for the year
Cash and cash equivalents at
beginning of year
8,412
11,668
907 (2,568)
28,618
16,950 (1,639) 929
Cash and cash equivalents at end of year
37,030
28,618 (732) (1,639)
Balance sheet cash and cash equivalents
Bank overdraft in current liabilities (note 19)
37,030
-
28,618
168
- (936) (1,807)
204
Cash and cash equivalents at end of year
37,030
28,618 (732) (1,639)
JAMES LATHAM PLC ANNUAL REPORT 2022
49
Financial Statements
Notes forming part of the Group Accounts
General information
James Latham plc is a public limited company
incorporated and domiciled in the United Kingdom under
the Companies Act 2006 and is listed on the AIM market.
The nature of the group’s operations and its principal
activities are set out in the Strategic Review. The address of
the registered office is Unit 3 Swallow Park, Finway Road,
Hemel Hempstead, Herts HP2 7QU.
New standards, interpretations and amendments
not yet effective
At the date of authorisation of these financial statements,
the following standards and interpretations which are
issued but not yet effective or endorsed (unless otherwise
stated), have not been applied:
- Amendments to IAS 16: Property, Plant and Equipment –
Proceeds before Intended Use (effective 1 January 2022).
1. Summary of significant accounting policies
The principal accounting policies applied in the
preparation of these consolidated accounts are set out
below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
(a) Basis of preparation
These consolidated and company accounts have been
prepared in accordance with UK-adopted International
Accounting Standards.
The accounts have been prepared under the historical
cost convention except for forward contract financial
instruments measured at fair value. The directors have
prepared the financial statements on the going concern
basis for the reasons set out on page 36. A summary
of the more important group accounting policies, which
have been applied consistently across the group, is set
out below.
New and amended IFRS standards that are effective
for the current year
A number of new or amended standards became applicable
for the current reporting period and as a result the group
and company has applied the following standards:
- Amendments to IFRS 16: COVID-19 related rent
concessions (effective for periods commencing on or
after 1 June 2020).
- Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16:
Interest Rate Benchmark Reform, phase 2.
- The above amendments did not have a material impact
on the financial statements of the group or company.
- Annual Improvements 2018-2020 Cycle:
Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 4
(effective 1 January 2022).
- Amendments to IFRS 3: Reference to the Conceptual
Framework (effective 1 January 2022).
- Amendments IAS 37: Onerous Contracts – Cost of
Fulfilling a Contract (effective 1 January 2022).
- Amendments to IAS 1: Presentation of Financial
Statements: Classification of Liabilities as Current or
Non-Current and Classification of Liabilities as Current
or Non-Current – Deferral of Effect Date (effective
1 January 2023).
The Directors do not expect the adoption of these
standards and amendments to have a material impact on
the Financial Statements.
(b) Basis of consolidation
The consolidated accounts include the company and all its
subsidiary undertakings (from the date of acquisition or to
the date of disposal where applicable). Intra group sales
and profits are eliminated on consolidation. The accounts
of all subsidiary undertakings are made up to 31 March.
A subsidiary is an entity controlled, either directly or
indirectly, by the company, where control is the power
to govern the financial and operating policies of the
entity so as to obtain benefit from its activities. The
acquisition method of accounting is used to account for
the acquisition of subsidiaries by the group. The cost of
an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Acquisition costs are
expensed in the period in which they are incurred.
50
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
1.1 Revenue recognition
Revenue comprises net sales to external customers
exclusive of Value Added Tax. Revenue is recognised upon
delivery to, or collection by, the customer as this is when
the performance obligation in the contract is fulfilled.
Revenue is shown net of returns and rebates and after
eliminating sales within the group.
For our credit customers, the payment falling will be due
under our standard payment terms and any outstanding
balance shown in trade receivables.
1.2 Segmental reporting
IFRS 8 “Operating Segments” requires operating segments
to be identified on the basis of internal reporting of
components of the group that are regularly reviewed
by the chief operating decision maker, which the group
considers to be the Chairman, to allocate resources to
the segments and to assess their performance. Further
information is available in note 2.
1.3 Operating profit
Operating profit consists of revenues and other operating
income less operating expenses. Operating profit excludes
net finance costs.
1.4 Functional and presentational currency
The presentation currency of the Group is sterling.
All Group companies have a functional currency of
Sterling (other than Abbey Wood Agencies Limited
which has a functional currency of the Euro) consistent
with the presentation of the Group’s consolidated
financial statements.
Amounts presented in the financial statements have been
rounded to the nearest £’000.
1.5 Foreign currency translation
Transactions denominated in foreign currencies are
recorded at the rates ruling on the date of the transaction.
At each balance sheet date, monetary assets and liabilities
denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Any gains
or losses arising from the transactions are taken to the
income statement.
In order to help manage its exposure to certain foreign
exchange risks, the group enters into forward contracts.
Gains and losses on forward contracts are recognised at
fair value through the income statement.
1.6 Property, plant and equipment
Property, plant and equipment is stated at cost less
depreciation. Depreciation on property, plant and equipment
is provided at rates calculated to write off the cost less
estimated residual value of each asset over its expected life.
It is calculated at the following rates:
Freehold buildings
Leasehold improvements
Fixtures and fittings
Plant, equipment and vehicles
- over 50 years
- over 5 to 15 years
- over 4 to 10 years
- over 5 to 20 years
Freehold land is not depreciated.
Estimated residual values and useful lives are reviewed
annually and adjusted where necessary.
1.7 Impairment of non-current assets
Goodwill is reviewed annually for impairment. The
carrying amounts of the group’s other intangible assets
and property, plant and equipment are reviewed at each
balance sheet date to determine whether there is any
indication of impairment. If such an indication exists,
the asset’s recoverable amount is estimated and compared
to its carrying value. Where the asset does not generate
cash flows that are independent from other assets, the
group estimates the recoverable amount of the cash-
generating unit to which the asset belongs. Where the
carrying value exceeds the recoverable amount, a provision
for the impairment loss is established with a charge being
made to the income statement.
1.8 Goodwill
Goodwill on consolidation, being the excess of the
purchase price over the fair value of the net assets of
subsidiary undertakings at the date of acquisition is
capitalised in accordance with IFRS 3 (revised) “Business
combinations”. Goodwill is tested annually for impairment,
or more frequently when there is an indication that
goodwill may be impaired. Goodwill is carried at cost less
accumulated impairment losses. Impairment losses on
goodwill are not reversed in a subsequent period.
1.9.1 Intangible assets – Trademark
Acquired trademarks are shown at historical cost.
Trademarks are considered to have a finite life and
are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line
method over the estimated useful life of 20 years.
JAMES LATHAM PLC ANNUAL REPORT 2022
51
Financial Statements
Notes forming part of the Group Accounts
1.9.2 Intangible assets – Customer lists
Acquired customer lists are shown at historical cost.
Customer lists are considered to have a finite life and
are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line
method over the estimated useful life of 10 years.
1.10 Inventories
Inventories are stated at the lower of cost (including an
appropriate proportion of attributable supplier rebates and
discounts) and net realisable value.
Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses. Provision is made for obsolete or slow moving
inventories where appropriate.
The cost of inventories is based on the weighted average
principle.
1.11 Financial instruments
Financial assets and financial liabilities are recognised on
the group’s balance sheet when the group has become
party to the contractual provisions of the instrument.
Subsequent measurement of all recognised financial assets
within the scope of IFRS 9 are required to be measured
at amortised cost or fair value on the basis of the group’s
business model for managing financial assets and their
contractual cash flows. Where assets are measured at fair
value, gains and losses are recognised through profit or
loss (fair value through profit or loss, “FVTPL”).
1.11.1 Trade and other receivables
Trade receivables are classified as financial assets at
amortised cost and are initially recognised at fair value.
They are subsequently measured at their amortised cost
using the effective interest method less any provision
for impairment.
The Company’s group receivables represent trading
balances and interest free amounts advanced to other
group companies with no fixed repayment terms.
The measurement of impairment losses depends
on whether the financial asset is ‘performing’,
‘underperforming’, or ‘non-performing’ based on the
company’s assessment of increases in the credit risk
of the financial asset since its initial recognition and any
events that have occurred before the year end which
have a detrimental impact on cash flows. In assessing
whether credit risk has increased significantly, the
company compares the risk of default at the year-end
with the risk of default when the receivable was
originally recognised using reasonable and supportable
past and forward-looking information that is available.
No impairment has been recognised against amounts due
from fellow subsidiaries at 31 March 2022 as any expected
credit losses are not material.
1.11.2 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at
bank and other short-term, highly liquid investments that
are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in
value. The carrying amount of these assets approximates
their fair value.
1.11.3 Financial liabilities and equity
Financial liabilities and equity instruments are
classified according to the substance of the contractual
arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets of
the group after deducting all of its liabilities.
1.11.4 Bank borrowings
Interest-bearing bank loans are recorded initially at
their fair value, net of direct transaction costs. Such
instruments are subsequently carried at their amortised
cost and finance charges, including premiums payable on
settlement or redemption, are recognised in the income
statement over the term of the instrument using an
effective rate of interest.
1.11.5 Trade payables
Trade payables are initially recognised at fair value
and subsequently at amortised cost using the effective
interest method.
1.11.6 Equity instruments
Equity instruments issued by the group are recorded at
the proceeds received, net of direct issue costs.
1.11.7 Derivative financial instruments
The group’s activities expose the entity primarily to
foreign currency and interest rate risk. The group uses
foreign exchange forward contracts and fixed rate bank
loans to help manage these exposures. The group does
not use derivative financial instruments for speculative
purposes.
Derivative financial instruments are initially recognised at
fair value on the date a derivative contract is entered into
and are subsequently remeasured at their fair value.
Foreign currency forward contracts and fixed rate bank
loans are not designated effective hedges and so are
marked to market at the balance sheet date, with any gains
or losses being taken through the income statement.
52
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
1.12 Current and deferred income tax
Current tax is the expected tax payable on taxable
income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any
adjustments to tax payable in respect of previous years.
Deferred tax expected to be payable or recoverable on
differences at the balance sheet date between the tax bases
and liabilities and their carrying amounts for financial
reporting purposes is accounted for using the liability
method. Deferred tax liabilities are generally recognised
for all taxable temporary differences, and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
differences can be utilised.
Deferred tax is calculated at the rates of taxation which are
expected to apply when the deferred tax asset or liability is
realised or settled, based on the rates of taxation enacted or
substantively enacted at the balance sheet date.
1.13 Leased assets
The Group as a Lessee
For any new contracts entered into after 1 April 2019,
the Group considers whether a contracts is, or contains
a lease. A lease is defined as ‘a contract, or part of a
contract, that conveys the right to use an asset for a period
of time in exchange for consideration’.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a
right-of-use asset and lease liability on the balance sheet.
A right-of-use asset is recognised at commencement of
the lease and initially measured at the amount of the
lease liability, plus any incremental costs of obtaining
the lease and any lease payments made at or before
the leased asset is available for use by the Group.
The right-of-use asset is subsequently measured at cost
less accumulated depreciation and any accumulated
impairment losses. The Group depreciates the right-
of-use asset on a straight-line basis from the lease
commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the
lease term. The Group also assesses the right-of-use
asset for impairment when such indicators exist.
At the commencement date, the Group measures the
lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate
implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate.
Subsequent to initial measurement, the liability will be
reduced for payments made and increased for interest.
Where leases are twelve months or less or of low value,
payments made are expenses evenly over the period of
the lease.
1.14 Dividend distribution
Dividend distribution to the company’s shareholders is
recognised as a liability in the group’s financial statements
in the period in which the dividends are approved by the
company’s shareholders.
1.15 Retirement benefit costs
Retirement benefit costs are accounted for in accordance
with IAS 19 (revised)”Employee benefits”. Full details of
the basis of calculation of the net pension asset or liability
disclosed in the balance sheet at 31 March 2022, and of the
amounts charged/credited to the income statement and
equity, are set out in note 20 to the accounts.
The cost of the defined benefit scheme is determined
using the projected unit credit method with actuarial
valuations being carried out at the end of each reporting
period. The current service cost represents the increase in
the present value of the plan liabilities expected to arise
from employee service in the current period. Past service
costs resulting from enhanced benefits are recognised at
the earlier of the date when a plan amendment or
curtailment occurs and the date when an entity recognises
any termination benefits, or related restructuring costs
under IAS 37 Provisions, Contingent liabilities and
Contingent Assets. Interest cost represents a net interest
cost on the net defined benefit liability. Gains and losses
on curtailments or settlements are recognised in the
income statement in the period in which the curtailment
or settlement occurs.
Actuarial gains and losses, which represent differences
between the expected and actuarial returns on the plan
assets and the effect of changes in actuarial assumptions,
are recognised in the statement of recognised income and
expense in the period in which they occur.
The retirement benefit obligation recognised in the
balance sheet represents the present value of the defined
benefit obligation, as reduced by the fair value of scheme
assets. Any asset resulting from the calculation is limited
to the present value of available refunds and reductions
in future contributions to the plan. Where the Group
is considered to have a contractual obligation to fund
the pension scheme above the accounting value of the
liabilities, an onerous obligation is recognised.
Pension payments to the group’s defined contributions
schemes are charged to the income statement as they arise.
JAMES LATHAM PLC ANNUAL REPORT 2022
53
Financial Statements
Notes forming part of the Group Accounts
1.16 Share-based payment
The group has applied the requirements of IFRS 2
“Share-based payment” which requires the fair value of
share-based payments to be recognised as an expense.
Certain employees receive remuneration in the form of
share options. The fair value of the equity instruments
granted is measured on the date at which they are granted
by using the Black-Scholes model, and is based on the
group’s estimate of the number of options that will
eventually vest. The fair value is expensed in the income
statement over the vesting period.
1.17 Treasury shares
Treasury shares are shown at historical cost, and deducted
from retained earnings directly in equity.
1.18 Employee Share Ownership Plan (ESOP)
Own shares represent the company’s own shares that are
held by the group sponsored ESOP trust in relation to
the group’s employees share schemes. Own shares are
deducted at cost in arriving at shareholders’ equity and
gains and losses on their sale or transfer are recognised
directly in equity. ESOP is treated separately and
consolidated in the group and company accounts.
1.19 Government grants
Grants received from the government are recognised at
their fair value where there is a reasonable assurance that
the grant will be received and the group will comply with
all attached conditions. Government grants in respect
of the Coronavirus Job Retention Scheme (“CJRS”) are
recognised in the period to which the underlying staff
costs relate to. The Group has elected to deduct the
amount received in respect of CJRS against the related
staff cost expenses (see note 4.)
1.20 Accounting estimates and judgements
The directors have considered the critical accounting
estimates and judgements used in the financial statements
and concluded that the main areas of judgements and
estimation are:
i. Post-employment benefits
ii. Stock obsolescence provision
iii. Leased assets
These judgements and estimates are based on historical
experience and various other assumptions that
management and the board of directors believe are
reasonable under the circumstances and are discussed in
more detail under their respective notes. Specifically, our
deficit recovery plan includes a potential requirement to
pay additional contributions, linked to future dividends
being above £4m in any year. A key accounting judgement
in relation to this is that future dividends are at the
discretion of the directors, can therefore be avoided, and
have not been taken into account of in the assessment
of the deficit recovery plan under IFRIC 14. For post-
employment benefits, the directors take advice from a
qualified actuary as shown in note 20. Due to the inherent
uncertainty involved in making assumptions and estimates,
including in respect of the estimation of the impact of
IFRIC 14 on the recognised asset/liability, actual outcomes
could differ from those assumptions and estimates.
In determining the recoverable amount of inventories the
Directors have to make estimates to arrive at cost and net
realisable value. Note 16 shows the estimate for obsolete
and slow moving stock which has been made using a
consistent approach to all stock lines.
IFRS 16 requires entities to make certain judgements and
estimations as to the nature and length of a lease and the
appropriate incremental borrowing rate to be applied.
Details of leases can be found in note 14.
54
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
2. Business and geographical segments
For management purposes, the group is organised into one trading division, that of timber importing and distribution,
carried out in each of the twelve locations trading predominantly in the United Kingdom and the Republic of Ireland.
The geographical turnover is as follows:
Republic of Ireland
Rest of Europe
Rest of the World
United Kingdom
2022
£’000
2021
£’000
16,937
271
38
368,122
8,731
62
47
241,322
385,368
250,162
In each location, turnover and gross margin is reviewed separately for Panel Products (including ATP) and Timber
(including Flooring and LDT). Most locations sell both products groups, except in the London region where for
operational efficiency Panel Products and Timber are sold from separate locations. Resources are allocated and
employees incentivised on the basis of the results of their individual location and not on the basis of a product group.
Whilst there are regional differences in the relative importance of product groups and classes of customer, each location
is considered to have similar economic characteristics and so can be aggregated into one segment. We therefore consider
there is one business segment and one geographic segment.
All revenue is recognised at a point in time for both financial years.
3. Profit before tax
Profit for the year has been arrived at after taking account the following charges/(credits):
Employee remuneration (note 4)
Net foreign exchange gains
Cost of inventories recognised as an expense and included
in ‘cost of sales’ in the consolidated income statement
Government grants from furlough scheme
Depreciation of property, plant and equipment (note 13)
Depreciation of right-of-use assets (note 14)
Loss/(profit) on disposal of property, plant and equipment
Amortisation (note 12)
Fees payable to the company’s auditors for the audit
of the consolidated and parent company accounts
Fees payable to the company’s auditors and its
associates for other services:
The audit of the company’s subsidiary pursuant to legislation
Other
Fees in relation to the audit of the James Latham plc
Pension and Assurance Scheme
Other expenses
Total cost of sales, Distribution costs and
Administrative expenses
2022
£’000
2021
£’000
24,998
(367)
19,153
(292)
278,568
(12)
2,659
1,301
193,685
(1,195)
2,576
1,290
50 (6)
167
168
25 10
104
-
11
19,698
327,203
83
9
11
15,631
231,122
JAMES LATHAM PLC ANNUAL REPORT 2022
55
Financial Statements
Notes forming part of the Group Accounts
4. Information regarding employees
The monthly average number of persons, including directors, employed by the group during the year was as follows:
Management and administration
Warehousing
Selling
Distribution
Group
Company
2022
Number
2021
Number
2022
Number
2021
Number
73
191
144
90
498
66
161
137
77
441
28
-
-
-
26
26
-
-
-
26
The aggregate payroll costs of these
employees were as follows:
£’000
£’000
£’000
£’000
16,424
Wages and salaries
1,695
Social security costs
58
Apprenticeship levy
Pension costs
2,015
Government grants from furlough scheme (12) (1,195)
Share-based payment
156
20,503
2,230
77
2,031
169
2,162
268
8
3,737
1,577
181
6
3,259
- (12)
156
169
24,998
19,153
6,344
5,167
Of the above payroll costs, £6,806,000 (2021: £4,938,000) is included in cost of sales, £11,718,000 (2021: £9,099,000)
is included in selling and distribution costs, and £6,474,000 (2021: £5,116,000) is included in administrative expenses
in the income statement.
5. Finance income
Interest receivable
The interest received is on bank deposits.
6. Finance costs
On bank loans and overdrafts
On pension liability
Interest on lease liabilities
On 8% Cumulative Preference shares
2022
£’000
29
2022
£’000
2021
£’000
11
2021
£’000
11
3
18 242
165 160
48
48
The interest payable on bank loans and overdrafts is payable on balances with a maturity analysis of less than six
months at the balance sheet date and interest on all other interest payments are based on balances with a maturity
analysis of over five years at the balance sheet date.
242
453
56
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
7. Tax expense
The charge for taxation on profit comprises:
2022
£’000
2021
£’000
Current year:
UK corporation tax at 19% (2021: 19%)
Deferred taxation - post employment benefits
- change in tax rates 879
- other
10,383
3,112
827 454
-
221 50
Profit before taxation
Tax at 19% (2021: 19%)
12,310
57,952
11,011
3,616
18,598
3,534
Tax effect of expenses/credits that are not deductible/
taxable in determining taxable profit
59
IBAs derecognised in current year (21) (17)
-
Change in tax rates
40
Other
879
373
68
Total tax charge
12,310
3,616
The change in tax rates in the current year is based on the future corporation tax rate increasing from 19% to 25%.
8. Dividends
2022 2021
Ordinary dividends:
Final 15.5p per share paid 27 August 2021 (2020: 10.0p)
Interim 6.5p per share paid 21 January 2022 (2021: 5.7p)
3,084
1,295
1,987
1,134
£’000
£’000 £’000 £’000
4,379 3,121
The Directors propose a final dividend for 2022 of 27.0p per share, that, subject to approval by the shareholders,
will be paid on 2 September 2022 to shareholders on the register on 5 August 2022.
Based on the number of shares currently in issue, the final dividend for 2022 is expected to absorb £5,379,000.
JAMES LATHAM PLC ANNUAL REPORT 2022
57
Financial Statements
Notes forming part of the Group Accounts
9. Earnings per ordinary share
Earnings per ordinary share is calculated by dividing the net profit for the year attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the year.
2022
’000
2021
’000
Issued ordinary share capital
20,160
Less: weighted average number of own shares held in treasury (234) (259)
Less: weighted average number of own shares held in ESOP Trust (21) (19)
20,160
Weighted average share capital
Add: dilutive effects of share options issued
Weighted average share capital for diluted earnings per ordinary
share calculation
19,905
85
19,882
31
19,990
19,913
10. Fixed asset investments – Company
Shares:
At 1 April 2020, 2021 and 31 March 2022
Details of subsidiary companies are given below:
Subsidiary undertakings
£’000
9,613
Name
Country of
incorporation
Class of shares Percentage
Principal activity
of ownership
Lathams Limited
England and Wales
£1 Ordinary
100%
Abbey Wood Agencies Limited *
Repubic of Ireland €1.27 Ordinary 100%
Abbey Lumber Limited *
Northern Ireland
£1 Ordinary
James Latham Trustee Limited
England and Wales
£1 Ordinary
LDT Westerham Limited
Baüsen Limited
England and Wales
£1 Ordinary
England and Wales
£1 Ordinary
James Latham (Midland and Western) Limited* England and Wales
£1 Ordinary
Advanced Technical Panels Limited*
England and Wales
£1 Ordinary
Latham Timber Centres (Bridgwater) Limited England and Wales
£1 Ordinary
James Latham (Warehousing) Limited
England and Wales
£1 Ordinary
Dresser Mouldings (Rochdale) Limited*
England and Wales
£1 Ordinary
Sarcon (No. 155) Limited
Northern Ireland
£1 Ordinary
I.J.K. Timber Group Limited
England and Wales
£1 Ordinary
Irvin and Sellers Limited*
Keizer Venesta Limited*
Northern Ireland
£1 Ordinary
Northern Ireland
£1 Ordinary
Northern Hardwoods Limited*
Northern Ireland
£1 Ordinary
William Davidson (Timber) Limited*
Northern Ireland
£1 Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
* Indirectly held.
Importing and distribution
of timber and panel products
Importing and distribution
of timber and panel products
Dormant
Corporate Trustee Company
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Importing and distribution
of timber and panel products
Dormant
Dormant
Dormant
Dormant
All companies operate within the United Kingdom and the Republic of Ireland and their registered office is at Unit 3,
Swallow Park, Finway Road, Hemel Hempstead, Herts, HP2 7QU, except for Sarcon (No. 155) Limited, Irvin and Sellers Limited,
Keizer Venesta Limited, Northern Hardwoods Limited and William Davidson (Timber) Limited whose registered office is
24-28 Duncrue Street, Belfast, Co Antrim, Northern Ireland, BT3 9AR.
58
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
11. Goodwill
Cost:
At 1 April 2020
Additions
At 1 April 2021
Additions (note 29)
At 31 March 2022
Impairment
At 1 April 2020, 31 March 2021 and 31 March 2022
Net book value
At 31 March 2022
At 31 March 2021
At 31 March 2020
Goodwill
£’000
997
-
997
500
1,497
125
1,372
872
872
Goodwill of £286,000 arose upon the acquisition of the shares and assets of Abbey Wood Agencies Limited which
is now a trading subsidiary of Lathams Limited. The date of acquisition was 1 February 2019.
Goodwill of £349,000 arose upon the acquisition of the shares and assets of Dresser Mouldings (Rochdale) Limited
which is now a trading subsidiary of Lathams Limited. The date of acquisition was 31 October 2019.
Goodwill of £500,000 arose upon the acquisition of the shares and assets of Sarcon (No. 155) Limited and
I.J.K. Timber Group Limited, the later of which is now a trading branch of Lathams Limited. The date of acquisition
was 26 October 2021.
In accordance with the group’s accounting policy the carrying value of goodwill is reviewed annually for impairment.
The review entails an assessment of the present value of projected return from an asset over a period of 5 years.
The pre-tax discount rate used in the group’s estimated weighted average cost of capital is currently 6% (2021: 6%).
The key assumptions in the impairment review used an annual growth rate in gross margins of 5.5% (2021: 5.5%) with
a perpetuity rate of 2% (2021: 2%).
The review performed at the year end did not result in the impairment of goodwill as the estimated recoverable
amount exceeded the carrying value. No reasonable change in the assumed growth rates would cause an impairment
to the assets. The recoverable amount of the cash generating unit to which the goodwill has been allocated is
determined based on value-in-use calculations.
JAMES LATHAM PLC ANNUAL REPORT 2022
59
Financial Statements
Notes forming part of the Group Accounts
12. Intangible assets – Group
Cost:
At 1 April 2020 and 2021
Additions on acquisition
At 31 March 2022
Amortisation
At 1 April 2020
Charge for the year
At 1 April 2021
Charge for the year
At 31 March 2022
Net book value
At 31 March 2022
At 31 March 2021
At 31 March 2020
Trademark
£’000
Customer
Lists
£’000
1
-
1
-
-
-
-
-
1
1
1
2,016
-
2,016
195
167
362
168
530
1,486
1,654
1,821
Total
£’000
2,017
-
2,017
195
167
362
168
530
1,487
1,655
1,822
The amortisation charge is included in the income statement under administrative expenses.
The registered trademarks of the company are Woodex®, Buffalo® Board and Baüsen® Flooring.
The Customer lists relates to the purchase of Abbey Wood Agencies Limited. The cost of the customer lists
represents the fair value of the assets at the time of the purchase.
The company does not have any intangible assets at 31 March 2022 or 31 March 2021.
60
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
13. Property, plant and equipment
13.1 Group
Group
Short
leasehold
property
improvements
£’000
Plant,
equipment
and
vehicles
£’000
Freehold
property
£’000
Total
£’000
Cost:
At 1 April 2020
Additions
Disposals
At 1 April 2021
Additions
Acquisition (note 29)
Disposals
At 31 March 2022
Depreciation:
At 1 April 2020
Disposals
Charge for the year
At 1 April 2021
Disposals
Charge for the year
At 31 March 2022
Net book value
At 31 March 2022
At 31 March 2021
At 31 March 2020
29,698
472
-
30,170
121
-
(3)
49,487
1,968
- (174) (174)
19,174
1,496
615
-
51,281
615
4,319
2
-
45
- (793) (796)
20,496
4,196
45
30,288
617
23,944
54,849
3,800
437
13,535
- - (172) (172)
2,576
9,298
2,038
37
501
4,301
(1)
429
474
11,164
15,939
- (683) (684)
38 2,192 2,659
4,729
512
12,673
17,914
25,559
105
11,271
25,869
25,898
141
178
9,332
9,876
36,935
35,342
35,952
Included in freehold property is land with a book value of £8,519,000 (2021: £8,519,000) which is not depreciated.
The depreciation charge is included in the income statement as follows:
Cost of sales
Selling and distribution costs
Administrative expenses
2022
£’000
1,678
803
178
2,659
2021
£’000
1,650
789
137
2,576
JAMES LATHAM PLC ANNUAL REPORT 2022
61
Financial Statements
Notes forming part of the Group Accounts
13.2 Company
Cost:
At 1 April 2020
Additions
At 1 April 2021
Additions
At 31 March 2022
Depreciation:
At 1 April 2020
Charge for the year
At 1 April 2021
Charge for the year
At 31 March 2022
Net book value
At 31 March 2022
At 31 March 2021
At 31 March 2020
Plant, equipment and vehicles
£’000
374
-
374
33
407
353
3
356
3
359
48
18
21
14. Right of use assets and lease liabilities
The Group has leases for some of its building which are made up of some of our depot locations and showrooms.
The vehicles are all car leases.
a) Right of use assets
The table below describes the nature of the Group’s leasing activities by type of right-of-use asset recognised in the
balance sheet.
Right-of-use assets
Building
Vehicles
No of right-of
use assets leased
13
93
Range of
remaining
lease
1-53 years
1-4 years
2022
Average
remaining
lease
8 years
2 years
2021
Average
remaining
lease
8 years
2 years
At the balance sheet date, there were no leases with extension options or options to purchase the asset at the end of
the lease. The review performed at the year end did not result in the impairment of the right-of-use assets.
62
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
14. Leases (continued)
Additional information on right-of-use asset by class of assets is as follows:
Group
Company
Property
£’000
Vehicles
£’000
Total
£’000
Property
£’000
Vehicles
£’000
Cost:
At 1 April 2020
Additions
Disposals
5,161
242
1,077
217
6,238
459
- (97) (97)
At 1 April 2021
6,600
1,391
Additions
Disposals (80) (43) (123)
1,197
267
5,403
1,124
Total
£’000
845
-
-
29
-
-
29
845
733
50
15 (15)
816
-
-
816
683
-
At 31 March 2022
6,447
1,421
7,868
1,499
64
1,563
Depreciation:
At 1 April 2020
Charge for the year
Disposals
896
903
1,343
1,290
- (97) (97)
447
387
2,536
At 1 April 2021
Charge for the year
1,301
Disposals (80) (43) (123)
1,799
916
737
385
15
14
-
18
7
-
33
21
-
29
20
54
25
39
19
- (15) (15)
At 31 March 2022
2,635
1,079
3,714
49
Balance sheet value
At 31 March 2022
At 31 March 2021
At 31 March 2020
3,812
342
4,154
1,450
3,604
4,265
460
630
4,064
4,895
787
801
29
35
4
11
78
1,485
791
812
The depreciation charge is included in the income statement as follows:
Cost of sales
Selling and distribution costs
Administrative expenses
Group
Company
2022
£’000
916
309
76
1,301
2021
£’000
903
321
66
1,290
2022
£’000
-
-
39
39
2021
£’000
-
-
21
21
JAMES LATHAM PLC ANNUAL REPORT 2022
63
Financial Statements
Notes forming part of the Group Accounts
14. Leases (continued)
b) Lease liabilities
Lease liabilities are presented in the balance sheet as follows:
Current
Non-current
Group
Company
2022
£’000
1,275
3,133
4,408
2021
£’000
1,123
3,137
4,260
2022
£’000
82
1,430
1,512
2021
£’000
10
799
809
The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease
liabilities at 31 March 2022 is as follows:
Within
1 year
£’000
1-2 years
£’000
2-5 years
£’000
5-10 years
£’000
over
10 years
£’000
2022
2021
Total
£’000
Total
£’000
Lease payments
5,386
Finance costs (128) (90) (176) (178) (580) (1,152) (1,126)
5,560
1,013
1,452
1,403
852
840
Net present values
1,275
750
676
835
872
4,408
4,260
At 31 March 2022 the Group had committed to leases which had not yet commenced. The total future cash outflows
for leases that had not yet commenced were as follows:
Vehicles
2022
£’000
341
2021
£’000
104
A total of £1,408,000 (2021: £1,394,000) was paid during the year in respect of lease principal and this is reflected in
the statement of cash flows within financing activities.
64
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
15. Deferred tax
15.1 Group
The net deferred tax asset/(liability) is made up of the following elements:
Post-
employment
benefits
£’000
Roll over
gains on
assets
£’000
Other (*)
£’000
Intangible
assets
£’000
Total
£’000
As at 1 April 2020 asset
As at 1 April 2020 liability
(Charge)/credit to the income statement (454)
Credit to other comprehensive
income and equity (restated) (630)
2,258
-
2,258
-
- (1,762) (1,224) (303) (3,289)
- (39) (11) (504)
-
-
-
- (630)
At 31 March 2021 asset
At 31 March 2021 liability
1,174
1,174
- (1,762) (1,263) (314) (3,339)
-
-
-
(Charge)/credit to the income statement (827)
- (262) 41 (1,048)
Change in tax rates in income statement 156 (556) (380) (99) (879)
Charge to other comprehensive
income and equity (349)
-
Acquisitions
- (349)
29
-
-
29
-
-
At 31 March 2022 asset
154
-
-
-
154
At 31 March 2022 liability
- (2,318) (1,876) (372) (4,566)
* Includes accelerated capital allowances, industrial buildings allowances and trading losses.
The comparative financial information for credit to other comprehensive income and equity has been restated
(see note 20.2).
15.2 Company
The deferred tax asset is made up as follows:
As at 1 April 2020
Charge to the income statement
Credit to other comprehensive income and equity
At 31 March 2021
Credit to the income statement
Credit to other comprehensive income and equity
At 31 March 2022
Post-
employment
benefits
£’000
Accelerated
capital
allowances
£’000
Total
£’000
12 (27) (15)
27
6
-
5 32
6
45 (22) 23
31
75
-
-
31
75
151 (22) 129
Deferred tax has been calculated using rates that are expected to apply when the asset or liability is expected to be
realised or settled, based on rates that were substantively enacted at the balance sheet date.
JAMES LATHAM PLC ANNUAL REPORT 2022
65
Financial Statements
Notes forming part of the Group Accounts
16. Inventories
2022
£’000
2021
£’000
Finished goods and goods for resale
49,376
Less: provisions for slow moving and obsolete stock (1,007) (1,114)
75,237
74,230
48,262
The inventories impairment charge for the year ended 31 March 2022 was £603,000 (2021: £812,000).
Impairment charges reversed during the year were £710,000 (2021: £517,000). The reversal of inventories arises from
sales in the year of the slow moving and obsolete stock previously provided for.
Inventories are pledged as securities against bank overdrafts (see note 19).
The company did not have any inventories at either 31 March 2022 or 31 March 2021.
17. Trade and other receivables
Group
Company
Trade receivables
Other receivables:
Other receivables
Amounts owed by subsidiaries
Tax receivable
Prepayments
2022
£’000
63,295
2,912
-
-
2,125
5,037
2021
£’000
44,645
1,658
-
182
1,518
3,358
68,332
48,003
2022
£’000
14
3
1,550
1,717
44
3,314
3,328
2021
£’000
3
-
631
3,331
27
3,989
3,992
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
The group has recognised an impairment against specifically identified expected credit losses (“ECLs”) at year end
of £305,000 (2021: £161,000). In line with the Group’s historical experience, and after consideration of current credit
exposures, the Group does not expect to incur any material ECL’s above those specifically identified and so has not
recognised any non-specific ECL’s in the current year (2021: £nil).
At 31 March 2022, £62,063,000 (2021: £44,215,000) of trade and other receivables were denominated in sterling,
£3,723,000 (2021: £2,003,000) were denominated in Euros and £421,000 (2021: £85,000) were denominated in
US dollars. The Company balances are all denominated in sterling.
Based on the balance sheet value of trade and other receivables, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £414,000 (2021: £209,000).
Amounts owed by subsidiaries are interest free and repayable on demand.
66
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
18. Trade and other payables
Trade payables
Other taxation and social security
Amounts owed to subsidiaries
Other payables
Accruals and deferred income
Group
Company
2022
£’000
34,758
7,937
-
3,909
4,272
50,876
2021
£’000
23,461
6,376
-
2,308
2,616
34,761
2022
£’000
46
857
-
706
186
2021
£’000
39
571
1
425
157
1,795
1,193
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 34 days (2021: 35 days). The directors consider that the
carrying amount of trade payables approximates to their fair value.
At 31 March 2022, £33,851,000 (2021: £23,392,000) of trade and other payables were denominated in sterling,
£2,593,000 (2021: £1,553,000) in US dollars, £2,133,000 (2021: £762,000) in Euros and £90,000 (2021: £62,000) in
Canadian dollars. The company balances are all denominated in sterling.
Based on the balance sheet value of trade and other payables, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £482,000 (2021: £238,000).
19. Interest bearing loans and borrowings
Group
Company
Current liabilities
Bank overdraft
Non-current liabilities
Cumulative preference shares
of £1 each (note 22)
Total
2022
£’000
-
-
592
592
2021
£’000
-
-
592
592
2022
£’000
936
936
592
592
2021
£’000
1,807
1,807
592
592
The loans and borrowings were all denominated in sterling.
The group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual
cash flows.
The cumulative preference shares are held on an ongoing basis and pay dividends at 8% per annum.
JAMES LATHAM PLC ANNUAL REPORT 2022
67
Financial Statements
Notes forming part of the Group Accounts
20. Retirement and other benefit obligation
Group
Retirement benefit obligations (note 20.2) (6,993)
5,874
IFRIC 14 adjustment
Net defined benefit (surplus) / liability after IFRIC 14 adjustment (1,119)
2022
£’000
Restated
2021
£’000
2,561
3,372
5,933
The company has the legal right to benefit from any surplus on the winding up of the scheme. The IAS19 valuation
at 31 March 2022 showed the scheme had an accounting surplus of £6,993,000. Under IFRIC 14, we are required to
consider how much of this surplus plus future committed deficit recovery contributions at the reporting date will
be recovered through a reduction of future contributions, or by refund of the surplus. A restriction of 35% has been
applied in respect of the authorised surplus payments charge that would be withheld by the scheme on a repayment
of a surplus. We have restated the comparative period to similarly account for this. (See note 20.2 for further details).
The annual funding update on an actuarial basis shows that at 31 March 2022, the scheme has a £3,680,000 deficit
(2021: £9,000,000 deficit) and we are on target to eliminate the actuarial deficit by the next triennial valuation on
31 March 2024, where the deficit recovery contributions will be reassessed. The IFRIC 14 adjustment is therefore a
technical accounting adjustment and unlikely to occur in practice.
20.1. Group pension schemes
James Latham plc operates a group contributory defined benefit pension scheme. The scheme is a funded scheme.
Benefits are provided based on earnings in the last twelve months before retirement, plus average bonuses received
over the last three years. The assets of the scheme are held separately from those of the company. 31% of the assets
are invested in equities, with 22% under passive management by Blackrock and 9% in a Multi-Asset Credit fund
managed by Wellington. 59% are held in bonds and gilts, with 18% in a Buy and Maintain Fund managed by Mercers,
8% in an Absolute Return Fund managed by Wellington and 33% in an Index Linked fund managed by Blackrock,
with the remaining 8% in a HLV Property Fund managed by Aviva and 2% in cash.
The group contributory defined benefit pension scheme is closed to new entrants, and a defined contribution
group scheme has been established for the pension provision of all other employees, including those contributing
through auto enrolment.
The pension charge for the year for all schemes was £2,031,000 (2021: £2,015,000). Of the charge, £405,000
(2021: £366,000) is included in cost of sales, £924,000 (2021: £948,000) is included in selling and distribution costs,
and £702,000 (2021: £701,000) is included in administrative expenses in the income statement.
Contributions are determined by a qualified actuary on a basis of triennial valuations using the projected unit funding
method. The most recent available valuation was at 31 March 2020. The assumptions which have the most significant
effect on the results of the valuation are those relating to the rate of return on investments and the rates of increase in
salaries and pensions.
It was assumed in the 31 March 2020 valuation that the investment return would be 4.1% per annum pre-retirement
and 2.5% per annum post-retirement, that the salary increases would average 3.4% per annum and that the present
and future pensions would increase at the rate of 3% per annum in respect of service to 1 January 1991. Pensions
accruing between 1 January 1991 and 28 February 1999 are required to increase at the greater of: (a) 4%, and (b)
3% on the GMP and 5% on the excess over the GMP. Pensions accruing after 1 March 1999 increase at Limited Price
Indexation which has been assumed to average 2.4% in the future. Limited Price Indexation was replaced by the
Consumer Price Index (CPI) for payrises occurring after 1 January 2014.
68
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme
The group operates a defined benefit pension scheme. The current practice of increasing pensions in line with
inflation is included in the measurement of the defined benefit obligation.
The defined benefit obligation of £68,534,000 (2021: £71,364,000) includes £18,516,000 (2021: £18,179,000) in
relation to active members, £14,275,000 (2021: £15,042,000) in relation to deferred members and £35,743,000
(2021: £38,143,000) in relation to members in retirement.
The retirement benefit asset/(liability) recognised in the balance sheet is the present value of the defined benefit
obligations, less the fair value of the scheme assets, adjusted for the impact of IFRIC 14. Actuarial gains and losses
are immediately recognised in the statement of other comprehensive income.
2022
£’000
Restated
2021
£’000
Change in benefit obligation
69,995
Benefit obligation at beginning of year
583
Service cost
142
Past service cost
Interest cost
1,641
Actuarial (gain)/loss (2,483) 2,272
Benefits paid (2,425) (3,243)
2 (26)
Premiums paid
71,364
596
-
1,480
Benefit obligation at end of year
Analysis of defined benefit obligation
Schemes that are wholly or partly funded
68,534
68,534
71,364
71,364
Change in scheme assets
58,183
68,803
Fair value of scheme assets at beginning of year
1,399
1,462
Interest income
8,989
Return on plan assets (excluding interest income) 3,644
Employer contributions (incl. employer direct benefit payments)
3,501
4,041
Benefits paid from plan (2,425) (3,243)
2 (26)
Expenses paid
Fair value of scheme assets at end of year
Amounts recognised in the balance sheet
Present value of funded obligations
Fair value of scheme assets
75,527
68,534
75,527
68,803
71,364
68,803
Net defined benefit (surplus)/liability before
IFRIC 14 adjustment (6,993)
5,874
IFRIC 14 adjustment
2,561
3,372
Net defined benefit (surplus)/liability after
IFRIC 14 adjustment (1,119)
5,933
JAMES LATHAM PLC ANNUAL REPORT 2022
69
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
2022
£’000
Restated
2021
£’000
Components of pension expense
583
Current service cost
142
Past service cost
Interest cost
1,641
Income on plan assets (1,462) (1,399)
596
-
1,480
Total pension expense recognised in the income statement
614 967
Actuarial gain immediately recognised (6,127) (6,717)
3,372
IFRIC 14 adjustment
2,502
Total recognised in the statement of other Comprehensive income (3,625) (3,345)
Cumulative amount of actuarial loss immediately recognised
9,397
13,022
Plan assets
The asset allocations at the year end were as follows:
Equities
Bonds
Property
Diversified Credit Fund
Other
Amounts included in the fair value of assets for
Equity instruments
Bond instruments
Property occupied
Diversified Credit Fund
Other assets used
2022
2021
21.8%
50.6%
8.3%
17.4%
1.9%
100.0%
2022
£’000
16,495
38,189
6,277
13,116
1,450
75,527
52.5%
37.8%
8.3%
-
1.5%
100.0%
2021
£’000
36,088
25,982
5,687
-
1,046
68,803
70
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
Prior year adjustment
The 31 March 2021 defined benefit deficit has been restated to take account of the requirement in IFRIC 14 to consider
the present value of benefits available in the form of future reduced contributions and/or refunds, taking into account
the deficit recovery plan the Group was committed to at 31 March 2021, which was overlooked in the prior period.
There is no change to profits or cash flows as reported for the year ended 31 March 2021 resulting from this
correction and no impact at 31 March 2020.
The prior year adjustment does not impact any previous years figures other than the year ended 31 March 2021.
The impact of the prior year adjustment can be seen as follows:
2021
(originally presented)
2021
Adjustment (restated)
Statement of changes in equity
Retained earnings at 1 April 2020
Profit for the year
99,433
14,982
-
-
Actuarial gain on defined benefit pension scheme
Deferred tax related to components of other
comprehensive income (1,276)
Foreign translation charge (58)
6,717 (3,372)
640 (636)
- (58)
99,433
14,982
3,345
Total comprehensive income for the year
5,383 (2,732)
2,651
Total transactions with owners (extract) (3,116)
- (3,116)
Retained earnings at 31 March 2021
116,682 (2,732)
113,950
2021
(originally presented)
2021
Adjustment (restated)
Balance Sheet
Deferred tax asset
1,174
Retirement and other benefit obligation (2,561) (3,372) (5,933)
123,843
Other balance sheet assets and liabilities
123,843
640
534
-
Net assets
Retained earnings
Share capital and other reserves
121,816 (2,732)
119,084
116,682 (2,732)
-
5,134
113,950
5,134
Total equity attributable to equity shareholders
of the parent company
121,816 (2,732)
119,084
JAMES LATHAM PLC ANNUAL REPORT 2022
71
Financial Statements
Notes forming part of the Group Accounts
20.2. Group defined benefit pension scheme (continued)
Weighted average assumptions used to determine benefit obligations:
Discount rate
Rate of compensation increase
Inflation (RPI)
Inflation (CPI)
Rate of pension increases (CPI capped at 5%)
Weighted average life expectancy for mortality tables used to
determine benefit obligations:
Male member age 65 (current life expectancy)
Female member age 65 (current life expectancy)
Male member age 45 (life expectancy at age 65)
Female member age 45 (life expectancy at age 65)
Weighted average assumptions used to determine pension expense:
Discount rate
Rate of compensation increase
2022
2.70%
4.40%
3.80%
3.40%
3.30%
22.3
24.5
23.6
25.7
2.70%
4.40%
2021
2.10%
3.80%
3.30%
2.80%
2.70%
22.5
24.6
23.8
25.8
2.10%
3.80%
Sensitivity analysis of the key assumptions
The main exposure of the defined benefit obligations relate to the volatility in the carrying value of the assets and
liabilities. The valuation of the scheme’s assets is dependant on the volatility of market conditions. The valuation
of the scheme’s liabilities is dependant on the assumptions used. The sensitivity of the valuation of the liability to
changes in the assumptions is shown in the table below:
Impact on deficit
(Decrease)/increase
£’000
(2,467)
Discount rate increases by 0.25%
Inflation rate increases by 0.25%
1,713
Life expectancy increases by one year 3,084
History of plan assets and defined benefit obligation
Present value of defined benefit obligation
Fair value of plan assets
2022
£’000
68,534
75,527
2021
£’000
71,364
68,803
Net (asset)/ liability before impact of IFRIC 14
(6,993)
2,561
2020
£’000
69,995
58,183
11,812
2019
£’000
69,819
61,105
2018
£’000
66,439
58,057
8,714
8,382
Contributions
The group expects to contribute £3,669,000 to the pension scheme for the year ending 31 March 2023.
20.3. Defined contribution pension payments
The group operates a defined contribution scheme managed by Aviva. The group has agreed to match contributions
by eligible employees up to a maximum of 7.5%.
Pension contributions paid to the defined contribution scheme for the year totalled £1,392,000 (2021: £1,280,000).
72
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
Group
Company
2022
£’000
-
-
2021
£’000
21
21
2022
£’000
-
-
2021
£’000
-
-
21. Other payables (non-current liabilities)
Other payables
22. Share capital
Ordinary shares
Authorised Issued
Ordinary shares of 25 pence each
Number
28,000,000
£’000
7,000
Number
20,160,000
£’000
5,040
2022, 2021 and 2020
Preference shares
Authorised Issued
8% Cumulative Preference Shares of £1 each
Number
£’000
Number
£’000
At 1 April 2020
Cancelled during the year
At 31 March 2021 and 2022
1,500,000
-
1,500
987
- (395,000) (395)
987,000
1,500,000
1,500
592,000
592
During the year ended 31 March 2020, the Company cancelled 395,000 Cumulative preference shares, leaving a
balance of 592,000 shares.
Share Capital
Ordinary share capital
2022
£’000
5,040
5,040
2021
£’000
5,040
5,040
The Preference shares are included in non-current liabilities (as interest bearing loans and borrowings).
See note 19.
The Cumulative Preference shares carry the right to receive an 8% dividend in priority to all other shares and
the right of a return on assets in priority to all other shares. They do not carry the right to further participate in
profits or assets, nor to vote at a General Meeting unless the resolution directly or adversely varies any of their
rights or privileges.
There were no movements in the Ordinary share capital of the company in either the year ended 31 March
2022 or 2021.
JAMES LATHAM PLC ANNUAL REPORT 2022
73
Financial Statements
Notes forming part of the Group Accounts
23. Share-based payment
Equity-settled share option schemes
Details of the share options outstanding during
the year are as follows:
2022
2021
Number
of share
options
Weighted
average
exercise
price (£)
Number
of share
options
Weighted
average
exercise
price (£)
Outstanding at beginning of year
Granted during the year
Forfeited during the year
Exercised during the year
273,314
17,226
(5,277) 7.42 (20,677)
(17,910) 6.62 (16,885)
252,978
16,280
7.45
10.12
Outstanding at the end of the year
246,071
7.68
252,978
7.18
9.25
7.17
5.30
7.45
The weighted average share price for options exercised during the year was £12.22 (2021: £9.04).
Details of the options outstanding at 31 March 2022 are shown below. 3,742 (2021: 6,000) of these options were
exercisable at the year end. No options expired during the periods covered by the above table.
Range of exercise prices
Number of shares
Weighted average expected
remaining life (years)
2022
CSOP
£3.96-£12.60
76,652
SAYE
£7.27
166,219
DBP
£9.05
3,200
2021
CSOP
SAYE
£1.65-£9.65
81,093
£7.27
171,885
3.0
0.9
2.0
3.0
1.9
The Black-Scholes option model is used to calculate the fair value of the options and the amount to be expensed.
No performance conditions apply to any of the share option schemes.
The inputs into the Black-Scholes model, expressed as weighted averages for options granted during the year are
as follows:
Share price at grant date
Option exercise price
Expected volatility
Option life
Risk free interest rate
Fair value
2022
CSOP
£12.60
£12.60
35.0%
5 years
0.74%
£4.00
SAYE
DBP
- £9.05
-
-
- £40.80
3 years
-
£0.80
-
-
-
CSOP
£9.25
£9.25
64.4%
5 years
0.20%
£4.91
2021
SAYE
-
-
-
-
-
-
Expected volatility was determined by calculating the historical volatility of the group’s share price over the previous
3 years. The option life is based on options being exercised in accordance with usual patterns. Options are forfeited if
the employee leaves the group before options vest. For the CSOP scheme, the options can be exercised up to 5 years
after the vesting date, and with the SAYE scheme, this period is 6 months. The risk free interest rate is based on 10 year
UK Government Bonds.
The group recognised total expenses of £169,000 (2021: £156,000) related to equity settled share-based payment
transactions in the year.
Share Incentive Plan
The Company also runs an approved Share Incentive Plan in which eligible employees can buy Partnership Shares
at mid-market price on the date of the grant. The shares are held in the employee benefits trust for a 5-year period.
The number of shares held in trust of this plan at 31 March 2022 was 161,958 (2021: 155,241).
74
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
24. Own shares
At 1 April 2020
Cost
Transfer to employees
At 31 March 2021
Transfer of treasury shares
Transfer to employees
At 31 March 2022
Ordinary shares
£’000
619
(148)
471
630
(228)
873
The investment in own shares represents 32,197 25p Ordinary shares (2021: 10,222 25p Ordinary shares) held on
behalf of the James Latham plc Employee Benefits Trust, a discretionary trust. This represents 0.16% (2021: 0.03%)
of the issued share capital. The maximum number of shares held during the year was 42,449 (0.21%). Dividends have
been waived and all income and expenditure of the trust has been dealt with through the group’s income statement.
None of these shares have been allocated to employees.
At 31 March 2022 209,200 (2021: 259,200) 25p Ordinary shares were held by the company as Treasury Shares. These
shares are held with a view to being used for employee share schemes. During the year 50,000 shares were issued to
the James Latham Employee Benefits Trust.
25. Cash generated from operations
Profit before tax
57,952
18,598 (4,297) (3,415)
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Adjustment for finance income and expense
4,033
Depreciation and amortisation
Loss/(Profit) on disposal of property, plant and equipment
50 (6)
Increase in inventories (23,990) (3,974)
Increase in receivables (18,034) (878)
Increase/(decrease) in payables
13,940 5,779
Retirement benefits (3,445) (2,776)
156
Share-based payments non cash amounts
442 47 20
25
42
-
-
-
-
1,443 (12)
810 (12)
-
156
213
4,128
-
169
169
Cash generated from operations
30,983
21,374 (1,786) (3,238)
JAMES LATHAM PLC ANNUAL REPORT 2022
75
Financial Statements
Notes forming part of the Group Accounts
25. Cash generated from operations (continued)
Movement in net funds/(debt)
Cash and cash
equivalents
£’000
Leases
£’000
Preference
shares
£’000
Total
£’000
16,950 (5,035) (592)
At 1 April 2020
Additions in the year - (459)
Cash flow 11,668
1,394
- (160)
Discount unwind on lease liabilities
11,323
- (459)
-
13,062
- (160)
At 31 March 2021 28,618 (4,260) (592) 23,766
- (1,391)
Additions in the year
-
Cash flow
9,820
- (165)
Discount unwind on lease liabilities
- (1,391)
1,408
- (165)
8,412
At 31 March 2022
37,030 (4,408) (592)
32,030
26. Related party transactions
26.1 Group
The group has a related party relationship with its subsidiaries and with its directors. Transactions between group
companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
The remuneration of the key management of the group, who are the Company’s directors, is set out below.
Salaries and other short-term employee benefits
Social security costs
Pension costs
Share-based payments
2022
£’000
1,319
147
221
21
1,708
2021
£’000
1,052
125
146
11
1,334
There are 4 (2021: 4) directors to whom retirement benefits are accruing under defined benefit schemes, and 4 (2021: 4)
directors that exercised share options during the year.
Emoluments for the highest paid director totalled £341,000 (2021: £261,000). The highest paid director exercised
636 CSOP share options during the year at a gain of £3,361. The highest paid director had an accrued defined benefit
pension of £71,000 (2021: £64,000) at the balance sheet date. Contributions to the highest paid director in respect of
which money purchase benefits may be payable totalled £54,000 (2021: £35,000).
The remuneration of the key management of the group, who are the company’s directors is set out above and shown
in the Directors’ Remuneration Report on pages 30 to 33. The gain made by directors who exercised share options
during the year was £11,000 (2021: £12,000).
The company undertakes the following transactions with the active subsidiary companies:
• Receiving an annual management charge to cover services provided of £2,897,000 (2021: £2,559,000).
• Corporation tax for the Parent and Subsidiary is paid through the parent company and recharged to the subsidiary.
The timing of the repayment will affect the balances outstanding.
Details of balances outstanding with subsidiary companies are shown in Notes 17 and 18.
Other than the payment of remuneration, there have been no related party transactions with the directors.
76
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
27. Capital commitments
At 31 March 2022, there were capital commitments contracted for but not provided in the accounts of £2,415,000
(2021: £2,077,000).
28. Financial instruments
The group and company’s activities expose the group to a number of risks including market risk (foreign currency
risk and interest rate risk), credit risk and liquidity risk. These risks are managed through an effective risk management
programme. Further details are set out in the Financial Review on pages 22 to 25.
Maturity analysis
The table below analyses the financial liabilities on a contractual gross undiscounted cash flow basis into maturity
groupings based on period outstanding at the balance sheet date up to the contractual maturity date.
GROUP
2022
Trade payables
Accruals
Other payables
Lease liabilities
Total
2021
Trade payables
Accruals
Other payables
Lease liabilities
Total
Less than
6 months
£’000
Between
6 months
and 1 year
£’000
Between
1 and
5 years
£’000
More than
5 years
£’000
34,758
4,272
3,909
702
43,641
23,461
2,616
2,308
623
29,008
-
-
-
701
701
-
-
-
623
623
Total
£’000
34,758
4,272
3,909
5,560
-
-
-
1,692
-
-
-
2,465
1,692
2,465
48,499
-
-
21
2,069
-
-
-
2,071
23,461
2,616
2,329
5,386
2,090
2,071
33,792
COMPANY
2022
Trade payables
Accruals
Amounts owed to Subsidiaries
Other payables
Lease liabilities
Bank overdraft
Total
2021
Trade payables
Accruals
Amounts owed to Subsidiaries
Other payables
Lease liabilities
Bank overdraft
Total
Less than
6 months
£’000
Between
6 months
and 1 year
£’000
Between
1 and
5 years
£’000
More than
5 years
£’000
46
186
-
706
66
936
1,940
39
157
1
425
19
1,807
2,448
-
-
-
-
65
-
65
-
-
-
-
15
-
15
-
-
-
-
482
-
482
-
-
-
-
121
-
121
-
-
-
-
1,781
-
1,781
-
-
-
-
1,488
-
1,488
Total
£’000
46
186
-
706
2,394
936
4,268
39
157
1
425
1,643
1,807
4,072
JAMES LATHAM PLC ANNUAL REPORT 2022
77
Financial Statements
Notes forming part of the Group Accounts
28. Financial instruments (continued)
Foreign currency risk
Approximately 43% of the group’s purchases are denominated in foreign currencies, principally the US dollar and the
Euro. Forward contracts are used where we have agreed exchange rates with our customers and we also use other
currency derivatives to help manage our short term exposure on a weakening sterling from time to time. However, no
more than 30 percent of the currency requirements will be covered by forward contracts or other currency derivatives.
Whilst purchases in foreign currencies are a significant figure, fluctuations in currency exchange rates do not have a
major impact on the results. As the group trades mainly in the UK, the market price of our products tends to fluctuate
in line with spot prices.
Included in group cash and cash equivalents at 31 March 2022 was £620,000 in US Dollars (2021: £7,000), £634,000 in
Euros (2021: £244,000) and £92,000 in Canadian dollars (2021: £29) at variable interest rates.
Based on the balance sheet value of cash and cash equivalents, as shown above, a 10% change in the currency
exchange rate would lead to an increase or decrease in income and equity of £135,000 (2021: £25,000).
There is no foreign currency held in the company accounts.
Interest rate risk
The interest rate exposure arises mainly from its interest bearing deposits. Deposits held at floating rates expose the
entity to cash flow risk whilst deposits held at fixed rate expose the entity to fair value risk.
At the reporting date, the interest rate profile of the group’s interest-bearing financial instruments was:
Group Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Fixed rate instruments
Cumulative preference shares of £1 each 592
592 592
592
Variable rate instruments
Cash and cash equivalents
Bank overdraft
37,030
-
28,618
-
204
936
168
1,807
Interest rate risk is limited to the cash and cash equivalents, bank overdraft and bank loans.
Based on the balance sheet value of cash and cash equivalents, bank overdraft and bank loans, as shown above, a 1%
change in interest base rates would lead to an increase or decrease in income and equity of £370,000 (2021: £286,000)
in the group and an increase or decrease in income and equity of £7,000 (2021: £20,000) in the company.
78
JAMES LATHAM PLC ANNUAL REPORT 2022
Financial Statements
Notes forming part of the Group Accounts
28. Financial instruments (continued)
Credit risk exposure
Credit risk arises on our trade receivables and cash and cash equivalents. Credit exposure is managed on a group basis
taking into account economic conditions and availability of credit insurance, and Appropriate credit limits are set for
each customer taking into account credit reports received from outside agencies, and previous credit history. Credit
insurance is taken out to cover approved individual debtors with balances over £40,000. Where limits are required above
£40,000 that cannot be backed by insurance, a sub-committee of the board will review reports on the customer, and
agree additional limits if appropriate. Bad debts are a minimal figure of sales this year and prior year, compared with
our target of 0.4%. Under IFRS 9, the Group now reviews the amount of credit loss associated with its trade receivables
based on forward looking estimates that take into account current and forecast credit conditions as opposed to relying
on past historical default rates. Also under IFRS 9 the Group has applied the Simplified Approach applying a provision
matrix based on number of days past due to measure lifetime expected credit losses and after taking into account
customer sectors with different credit risk profiles and current and forecast trading conditions Bad debts are provided
for debts overdue by more than 120 days, or if we have received official paperwork. Debtors are written off when we
have either received official paperwork that the customer is no longer trading or have exhausted all avenues of recovery.
The carrying amount of financial assets recorded in the accounts, which is net of impairment losses, represents the
maximum exposure to credit risk. The maximum exposure to credit risk at the reporting date was:
Financial assets measured
at amortised cost
Trade receivables
Other receivables
Amounts owed by subsidiaries
Cash and cash equivalents
Total
Group Company
2022
£’000
63,295
2,912
-
37,030
103,237
2021
£’000
44,645
1,658
-
28,618
74,921
2022
£’000
14
3
1,550
204
1,771
2021
£’000
3
-
631
168
802
Liquidity risk
The group closely monitors its cash position to ensure that it has sufficient funds to meet the obligations of the
group as they fall due. Short term bank deposits are executed only with organisations with a long term rating of at
least A- from the major rating agencies.
The following table shows the financial liabilities
measured at amortised cost:
Group Company
Trade payables
Other payables
Amounts owed to subsidiaries
Accruals
Bank overdraft
Total
2022
£’000
34,758
3,909
-
4,272
-
42,939
2021
£’000
23,461
2,329
-
2,616
-
28,406
2022
£’000
46
706
-
186
936
1,874
2021
£’000
39
425
1
157
1,807
2,429
JAMES LATHAM PLC ANNUAL REPORT 2022
79
Financial Statements
Notes forming part of the Group Accounts
28. Financial instruments (continued)
Capital management
The group manages its capital risk by ensuring that its capital, which represents share capital, retained earnings,
investments in own shares and cash, is sufficient to support the ongoing needs of the business, and is organised to
try and minimise the cost of capital over the medium term. The group’s current strategy is to maintain sufficient cash
balances to satisfy ongoing needs.
Finance income
An analysis of finance income is set out in note 5 to the consolidated accounts.
Finance costs
An analysis of finance costs is set out in note 6 to the consolidated accounts.
29. Business Combinations
On 21 October 2021 the Group acquired 100% of the issued share capital of Sarcon (No. 155) Limited, a company
incorporated in Northern Ireland whose trading subsidiary’s principle activity is the distribution of timber and panel
products. The acquisition will allow the company to increase its offering to the market in Northern and Southern Ireland.
The fair values are as follows:
Property, plant and equipment
Inventories
Trade and other receivables
Cash
Trade and other payables
Deferred tax liability
Net assets acquired
Goodwill
Consideration
2022
£’000
65
1,978
2,477
2,262
(2,447)
29
4,364
500
4,864
2022
£’000
The consideration was satisfied by a cash payment of £4,500,000 during the year, with a balance of £364,000 to
be made upon final completion accounts. It is expected that the gross contractual amounts receivable above are
expected to be received in full.
Cash consideration paid for acquisition
Less cash acquired
4,500
(2,262)
Acquisition of businesses net of cash and cash equivalents acquired
2,238
There were acquisition costs of £57,000, these cost have been included in operating activities in the cash flow statement.
Trade and other receivables above includes £2,206,000 in respect of trade receivables, there was no loss allowance
recognised on acquisition.
Since the acquisition date, IJK Timber Group Limited (the trading subsidiary of Sarcon No. 155 Limited) has contributed
£4,847,000 to group revenues and £525,000 to group profit. If the acquisition had occurred on 1 April 2021, group revenue
would have been £391,583,000 and group profit would have been £46,546,000.
80
JAMES LATHAM PLC ANNUAL REPORT 2022
Notice of Annual General Meeting
Notice is hereby given that the one hundred and twenty
third Annual General Meeting of the Company will be held
at Unit 1 Swallow Park, Finway Road, Hemel Hempstead,
Herts, HP2 7QU on Wednesday 31st August 2022 at
12.30pm. Resolutions 1 to 7 inclusive will be proposed
as ordinary resolutions, and resolutions 8 and 9 will be
proposed as special resolutions.
8. Disapplication of pre-emption rights: To consider, and if
thought fit, pass the following resolution: “THAT subject
to the passing of the previous Resolution 7, pursuant to
section 571 of the Companies Act 2006, section 561 of
the Companies Act 2006 shall not apply to any allotment
or agreement to allot equity securities pursuant to the
authority conferred by Resolution 8:
(a) this power shall be limited to:
(i) the allotment of equity securities in connection
with or subject to an offer or invitation, open for
acceptance for a period fixed by the Directors,
to the holders of Ordinary Shares on the register
on a fixed record date in proportion (as nearly
as maybe) to their respective holdings or in
accordance with the rights attached thereto
(including equity securities which, in connection
with such offer or invitation, are the subject of such
exclusions or other arrangements as the Directors
may deem necessary or expedient to deal with
the fractional entitlements which would otherwise
arise or with legal or practical problems under the
laws of, or the requirements of any recognised
regulatory body or any stock exchange in any
territory or otherwise how so ever); and
(ii) other than pursuant to paragraph (a)(i) of this
Resolution, the allotments of equity securities
for cash up to an aggregate nominal amount of
£252,000; and
(b) this power shall expire at the earlier of the conclusion
of the next Annual General Meeting of the Company
or 15 months from the date after passing of this
Resolution except that the Directors may allot equity
securities under this power after that date to satisfy an
offer or agreement made before this power expired.”
Ordinary business
1. To receive and adopt the Directors’ Report and
Accounts for the year ended 31 March 2022 together
with the Independent Auditor’s report thereon.
2. To declare the final dividend recommended by the
directors on the ordinary shares of the Company.
3. To re-elect Fabian French as a director, who retires
by rotation.
4. To re-elect Paula Kerrigan as a director, who retires
by rotation.
5. To re-elect Nick Latham as a director, who retires by
rotation.
6. To re-appoint RSM UK Audit LLP, Chartered
Accountants, as auditors to hold office from the
conclusion of the meeting to the conclusion of the next
meeting at which accounts are laid before the Company,
at a remuneration to be determined by the directors.
Other business
7. Directors authority to allot shares: To consider, and if
thought fit, pass the following resolution: “THAT in
substitution for all existing authorities, to the extent
unused, the directors be and they are generally and
unconditionally authorised for the purposes of section
551 of the Companies Act 2006 to exercise all the
powers of the Company to allot equity securities up to
an aggregate nominal amount of £1,680,000 provided
that this authority shall expire at the earlier of the
conclusion of the Company’s next Annual General
Meeting or 15 months from the date of the passing of
this resolution and that the Company may before such
expiry make offers or agreements which would or might
require relevant securities to be allotted after such
expiry and the Directors may allot relevant securities in
pursuance of such offers or agreements notwithstanding
that the authority conferred has expired. The expression
‘equity securities’ and ‘allotment’ shall bear the same
meanings respectively given to the same in section 560
Companies Act 2006.”
JAMES LATHAM PLC ANNUAL REPORT 2022
81
Notice of Annual General Meeting
9. Authority of the Company to purchase its own shares:
To consider and, if thought fit, pass the following
resolution: “THAT the Company be and is generally and
unconditionally authorised to make one or more market
purchases (within the meaning of section 693 (4) of the
Companies Act 2006) of its Ordinary Shares of 25p each
provided that:
(a) the maximum aggregate number of Ordinary Shares
which may be purchased is 2,016,000 (representing
10% of the issued share capital of the Company);
(b) the price at which Ordinary Shares may be purchased
shall not be more than 105% of the average of the
closing middle market price for the Ordinary Shares
as derived from the AIM section of the London Stock
Exchange Daily Official List for the five business days
preceding the date of purchase and shall not be less
than 25p per Ordinary Share (in both cases exclusive
of expenses); and
(c) this power shall expire at the earlier of the conclusion
of the next Annual General Meeting of the Company
or 15 months from the date of the passing of this
resolution.”
By Order of the Board
D.A. Dunmow
Company Secretary
Registered Office: Unit 3, Swallow Park, Finway Road,
Hemel Hempstead, Hertfordshire HP2 7QU
12 July 2022
Notes:
The Report and Accounts are sent to all members of
the Company.
Holders of preference shares are not entitled to be present,
either personally or by proxy, or to vote at any general
meeting so long as the dividends on such preference
shares are regularly paid or unless a resolution is to be
proposed for winding up the Company, reducing its capital
or selling its undertaking or adversely affecting the rights of
the holders of preference shares.
A member entitled to attend and vote at the above Meeting
is entitled to appoint one or more proxies to attend, speak
and vote on his/her behalf. A proxy need not be a member
of the Company.
Any corporation which is a member can appoint one or
more corporate representatives who may exercise on its
behalf all of its powers as a member provided that they do
not do so in relation to the same shares.
A proxy form is enclosed. To be valid, it must be
lodged with the Company’s Registrars at Computershare
Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY, not later than 48 hours before the fixed
time for the Meeting.
Copies of directors’ contracts of service, the register of
interests of directors, the Company’s memorandum of
association and the articles of association will be available
for inspection at the Registered Office during normal
business hours from the date of the above notice until
the close of the meeting.
In accordance with Regulation 41 of the Uncertified
Securities Regulations 2001, only those members eligible
to vote and entered on the Company’s register of
members as at 12.30pm on Monday 29th August 2022
are entitled to attend and vote at the meeting; or, if
the meeting is adjourned, shareholders entered on the
Company’s register of members not later than 48 hours
before the time fixed for the adjourned meeting shall be
entitled to attend and vote at the adjourned meeting.
At 28th June 2022, the Company’s issued share capital
consisted of 20,160,000 shares of which 209,200 shares
are held in Treasury. Each share not held in Treasury
carries one vote. The total number of voting rights are
therefore 19,950,800.
82
JAMES LATHAM PLC ANNUAL REPORT 2022
Notice of Annual General Meeting
Share dealing service for shareholders
We operate an internet share dealing service with our
registrar, Computershare Investor Services PLC, at
www.computershare.com/dealing/uk which provides
shareholders with a simple way to sell or purchase shares
(subject to availability) on the London Stock Exchange.
Real time trading is available during market hours
(08.00 to 16.30 Monday to Friday excluding bank holidays).
In addition you can place a sale instruction outside
of market hours. The commission is 1.4% subject to a
minimum of £40. Before you can sell your shares online,
you will need to become a member of Computershare’s
Investor Centre and register for the Registry Share
Dealing Sales Service. A postal service is also available.
No stamp duty is currently payable on share transfers.
Detailed terms and conditions are available at
www.computershare.com/dealing/uk
This is not a recommendation to buy, sell or hold shares in
James Latham plc. If you are unsure of what action to take
contact a financial adviser authorised under the Financial
Conduct and Markets Act 2000. Please note that share
values may go down as well as up, which may result in you
receiving less than you originally invested.
In so far as this statement constitutes a financial promotion
for the share dealing service provided by Computershare
Investor Services it has been approved by Computershare
Investor Services PLC for the purpose of Section 21(2)
(b) of the Financial Conduct and Markets Act 2000 only.
Computershare Investor Services PLC is regulated by the
Financial Conduct Authority.
Where this has been received in a country where the
provision of such a service would be contrary to local laws
or regulations, this should be treated as information only.
JAMES LATHAM PLC ANNUAL REPORT 2022
83
Notes
84
JAMES LATHAM PLC ANNUAL REPORT 2022
James Latham Locations
1
2
3
4
4
5
6
7
8
9
• •
James Latham Dudley
T: 01384 234444
F: 01384 233121
E-mail: panels.dudley@lathams.co.uk
timber.dudley@lathams.co.uk
James Latham Fareham
T: 01329 854800
E-mail: panels.fareham@lathams.co.uk
timber.fareham@lathams.co.uk
• •
James Latham Gateshead
T: 0191 469 4211
F: 0191 469 2615
E-mail: panels.gateshead@lathams.co.uk
timber.gateshead@lathams.co.uk
• •
James Latham Leeds
T: 0113 387 0830
F: 0113 387 0855
E-mail: leeds@lathams.co.uk
• •
ATP (Advanced Technical Panels)
T: 0113 387 0850
F: 0113 387 0855
E-mail: atp@lathams.co.uk
•
James Latham Scotland
T: 01698 838777
F: 01698 831452
Email: scotland@lathams.co.uk
• •
James Latham Leicester
T: 0116 288 9161
F: 0116 281 3806
E-mail: panels.leicester@lathams.co.uk
timber.leicester@lathams.co.uk
• •
• •
James Latham Yate
T: 01454 315421
F: 01454 323488
E-mail: panels.yate@lathams.co.uk
timber.yate@lathams.co.uk
James Latham Hemel Hempstead
T: 01442 849000
F: 01442 239287
E-mail: panels.hemel@lathams.co.uk
•
James Latham Thurrock
T: 01708 869800
F: 01708 860900
E-mail: panels.thurrock@lathams.co.uk
•
10
James Latham Purfleet
T: 01708 864477
F: 01708 862727
E-mail: timber.purfleet@lathams.co.uk
•
KEY:
•
•
PANEL PRODUCTS
TIMBER PRODUCTS
Distribution
facilities
1
2
3
Port Of Tilbury
Port of Liverpool
Port of Grangemouth
SCOTLAND
5
3
3
GATESHEAD
3
LDT
NAUL
17
ABBEY WOODS DUBLIN 13
LEEDS 4
DRESSER MOULDINGS 15
12
2
2
MANCHESTER SHOWROOM
LEICESTER 6
DUDLEY
1
ABBEY WOODS CORK 14
HEMEL HEMPSTEAD 8
YATE 7
LONDON SHOWROOM 11
LDT 16
9
10
THURROCK
PURFLEET
1
1
FAREHAM 2
11
12
13
James Latham -
Product Specification Showroom
London
Suite 301, Business Design Centre,
52 Upper Street, Islington, N1 0QH
T: 020 7288 6417
E-mail: BDC@lathams.co.uk
James Latham -
Product Specification Showroom
Manchester
31a Tib St, Manchester M4 1LX
T: 0161 537 1185
E-mail: pssm@lathams.co.uk
Abbey Woods - Ireland, Dublin
T: +353 01 839 3435
F: +353 01 832 5968
E-mail: sales@abbeywoods.ie
www.abbeywoods.ie
• •
14
15
16
Abbey Woods - Ireland, Co. Cork
T: +353 021 421 1788
F: +353 021 421 1786
E-mail: sales@abbeywoods.ie
www.abbeywoods.ie
• •
Dresser Mouldings
T: 01706 658900
E-mail: sales@dressermouldings.com
www.dressermouldings.com
•
•
LDT
T: 01959 561777
E-mail: LDTSales@directtimber.co.uk
www.directtimber.co.uk
17 LDT Ireland
•
E-mail: Pack.Sales@directtimber.com
e marketing@lathams.co.uk
w www.lathamtimber.co.uk
JAMES LATHAM PLC
Unit 3 Swallow Park Finway Road Hemel Hempstead Herts HP2 7QU
Telephone 01442 849100 Fax 01442 267241 Email: plc@lathams.co.uk
www.lathamtimber.co.uk